PROSPECTUS SUPPLEMENT NO. 5		Filed Pursuant to Rule 424(b)(3)
(To Prospectus dated May 1, 2007)		Registration No. 333-135464

$500,000,000

Allied World Assurance Company Holdings, Ltd

7.50% Senior Notes due 2016

     This Prospectus Supplement No. 5 supplements the Market-Making Prospectus, dated May 1, 2007, relating to the public offering of the issuer’s 7.50% senior notes due 2016, which closed on July 26, 2006. Goldman, Sachs & Co. is continuing to make a market in the senior notes pursuant to the Market-Making Prospectus.

     This Prospectus Supplement No. 5 includes a Current Report on Form 8-K filed with the SEC on November 8, 2007. The Form 8-K includes an earnings release announcing the issuer’s financial results for the fiscal quarter ended September 30, 2007.

     You should read this Prospectus Supplement No. 5 in conjunction with the Market-Making Prospectus. This Prospectus Supplement No. 5 updates information in the Market-Making Prospectus and, accordingly, to the extent inconsistent, the information in this Prospectus Supplement No. 5 supersedes the information contained in the Market-Making Prospectus.

     Before you invest in the issuer’s senior notes, you should read the Market-Making Prospectus and other documents the issuer has filed with the SEC for more complete information about the issuer and an investment in its senior notes. You may get these documents for free by visiting EDGAR on the SEC Website at www.sec.gov. Alternatively, you may obtain a copy of the Market-Making Prospectus by calling Goldman, Sachs & Co. toll-free at 1-866-471-2526.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement is truthful and complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus Supplement No. 5 is November 8, 2007.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Bermuda		001-32938		98-0481737
(State or Other Jurisdiction		(Commission File Number)		(I.R.S. Employer
of Incorporation)				Identification No.)

27 Richmond Road
Pembroke HM 08, Bermuda
(Address of Principal Executive Offices and Zip Code)

Registrant’s telephone number, including area code: (441) 278-5400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition

     On November 7, 2007, Allied World Assurance Company Holdings, Ltd issued a press release reporting its third quarter 2007 results and the availability of its third quarter 2007 financial supplement. The press release and the financial supplement are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively. The information hereunder is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is not otherwise subject to the liabilities of that section and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits

Exhibit
Number		Description
99.1		Press release, dated November 7, 2007, reporting third quarter results.
99.2		Third Quarter 2007 Financial Supplement.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit
Number		Description
99.1		Press release, dated November 7, 2007, reporting third quarter results.
99.2		Third Quarter 2007 Financial Supplement.

Exhibit 99.1

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD REPORTS THIRD
QUARTER 2007 OPERATING RESULTS AND ANNOUNCES INCREASED
QUARTERLY DIVIDEND

PEMBROKE, BERMUDA, November 7, 2007 - Allied World Assurance Company Holdings, Ltd (NYSE: AWH) today reported net income of $109.0 million, or $1.72 per diluted share, for the third quarter 2007 compared to net income of $114.0 million, or $1.89 per diluted share, for the third quarter 2006. Net income for the nine months ended September 30, 2007 was $346.2 million, or $5.51 per diluted share, compared to net income of $314.5 million, or $5.76 per diluted share, for the first nine months of 2006. 

The company reported operating income of $112.2 million, or $1.77 per diluted share, for the third quarter 2007 compared to operating income of $122.5 million, or $2.03 per diluted share, for the third quarter 2006. Operating income for the nine months ended September 30, 2007 was $357.9 million, or $5.70 per diluted share, compared to operating income of $338.5 million, or $6.20 per diluted share, for the first nine months of 2006. The decrease in diluted earnings per share amounts reflects the increase in the number of common shares outstanding resulting primarily from the company’s initial public offering in July 2006.

The company’s annualized net income return on average equity for the three and nine months ended September 30, 2007 was 17.5% and 19.4%, respectively. The company’s annualized operating return on average equity for the three and nine months ended September 30, 2007 was 18.0% and 20.0%, respectively.

President and Chief Executive Officer Scott Carmilani commented, “Allied World continues to produce consistent results and to grow shareholders’ book value. Through September, the company has increased diluted book value per share by 19.8%, on an annualized basis. The company has benefited from significantly increasing investment income and from a light catastrophe period.”

Mr. Carmilani continued, “We are in an increasingly challenging marketplace, characterized by increased competition and rate declines in direct insurance business. We continue to put our highest priority on underwriting discipline. At this time, we are being very selective in underwriting business that meets our target risk and return profile.”

Mr. Carmilani added, “However, we will continue to pursue what we believe are good business opportunities and diversify our global operating platforms. Specifically, we are engaging highly talented teams of people and expanding our platform and product offerings in carefully selected markets and geographies in order to pursue the best returns possible.”

Underwriting Results

Gross premiums written for both the three and nine months ended September 30, 2007 in each operating segment were down over the comparable 2006 periods as a result of

increasing competition and declining rates for new and renewal business, as well as the non-renewal of business that did not meet our underwriting requirements.

Gross premiums written were $276.3 million in the third quarter 2007, a 23.8% decrease compared to $362.5 million in the third quarter 2006.  Approximately $32.8 million of this decrease was due to the timing of a renewal and estimated premium adjustments in the reinsurance segment.  One large treaty that previously renewed in the third quarter of 2006 was renewed in the second quarter of 2007 for approximately $23.1 million, and there was a reduction in estimated premium adjustments of approximately $9.7 million recorded in the third quarter 2007 as compared to the third quarter 2006.  The adjusted reduction in gross premiums written would have been 15.1% for the third quarter 2007 compared to the third quarter 2006.

For the nine months ended September 30, 2007, gross premiums written totaled $1,245.2 million, a 9.7% decrease compared to $1,378.9 million in the first nine months of 2006.  Of this decrease, approximately $59.6 million was due to a reduction in estimated premium adjustments recorded in the reinsurance segment in the first nine months of 2007 as compared to the first nine months of 2006.  Absent these adjustments, gross premiums written would have been reduced by 5.6% for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006.

Net premiums written were $219.3 million in the third quarter 2007, a 26.4% decrease compared to $298.0 million in the third quarter 2006. For the nine months ended September 30, 2007, net premiums written totaled $963.7 million, a 12.1% decrease compared to $1,095.9 million in the first nine months of 2006. The decrease in net premiums written reflected the reduction in gross premiums written and the increased utilization of reinsurance in the casualty segment.

Net premiums earned in the third quarter 2007 were $283.7 million, a 10.7% decrease compared to $317.8 million for the third quarter 2006. For the nine months ended September 30, 2007, net premiums earned totaled $873.3 million, a 6.3% decrease from net premiums earned of $932.2 million in the first nine months of 2006.

The combined ratio was 84.1% in the third quarter 2007 compared to 76.9% in third quarter 2006. The loss and loss expense ratio was 61.1% in the third quarter 2007 compared to 56.9% in the third quarter 2006. During the third quarter 2007, the company recorded net favorable reserve development on prior loss years of $28.6 million, a benefit of 10.1 percentage points to the company’s loss and loss expense ratio for this quarter. In the third quarter 2006, the company recorded net favorable reserve development on prior loss years of $38.7 million, a benefit of 12.2 percentage points to the company’s loss and loss expense ratio for that quarter. The combined ratio for the nine months ended September 30, 2007 was 81.2% compared to 80.0% for the first nine months of 2006.

Investment Results

Net investment income in the third quarter 2007 was $76.1 million, an increase of 24.0% over the $61.4 million of net investment income in the third quarter 2006. For the nine months ended September 30, 2007, net investment income was $222.7 million, an increase of 24.9% over the $178.4 million of net investment income in the first nine months of 2006. These increases primarily reflect the growth in the company’s invested asset base driven by positive operating cash flows and increased interest rates.

Net realized investment losses for the three and nine months ended September 30, 2007 were $4.2 million and $12.2 million, respectively. During the three and nine months ended September 30, 2007, the company recorded write-downs of approximately $25.4 million and $37.7 million, respectively, related to declines in market value of securities in our available for sale portfolio that were considered to be other than temporary. Net realized losses for both the three and nine months ended September 30, 2007 included a write down of $23.9 million for our investment in the Goldman Sachs Global Alpha Hedge Fund PLC. Offsetting these net realized investment losses for the three and nine months ended September 30, 2007, the company recorded net realized gains from the sale of securities of $21.2 million and $25.5 million, respectively.

Shareholders’ Equity

As of September 30, 2007, shareholders’ equity was $2.6 billion compared to $2.2 billion reported as of December 31, 2006. Diluted book value per share was $40.50 as of September 30, 2007 compared to $35.26 as of December 31, 2006.

Quarterly Dividend

Allied World’s board of directors has declared a quarterly dividend of $0.18 per common share, a 20% increase over the $0.15 per share dividend declared last quarter. The dividend will be payable on December 20, 2007 to shareholders of record as of the close of business on December 4, 2007.

Conference Call

Allied World will host a conference call on Thursday, November 8, 2007 at 8:30 a.m. (Eastern Time) to discuss its third quarter financial results. The public may access a live webcast of the conference call at the “Investor Relations” section of the company’s website at www.awac.com. In addition, the conference call can be accessed by dialing (866) 825-3308 (U.S. and Canada callers) or (617) 213-8062 (international callers) and entering the passcode 30306753 approximately ten minutes prior to the call.

Following the conclusion of the presentation, a replay of the call will be available through Thursday, November 22, 2007 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 74463683. In addition, the webcast will remain available online through Thursday, November 22, 2007 at www.awac.com.

Financial Supplement

A financial supplement relating to the third quarter 2007 will be available at the “Investor Relations” section of the company’s website at www.awac.com.

Non-GAAP Financial Measures

In presenting the company’s results, management has included and discussed in this press release certain non-GAAP financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and Exchange Commission. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain 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, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“GAAP”).

“Operating income” is an internal performance measure used by the company in the management of its operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses and foreign exchange gains or losses. The company excludes net realized investment gains or losses and net foreign exchange gains or losses from its calculation of operating income because the amount of these gains or losses is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. The company believes these amounts are largely independent of its business and underwriting process and including them may distort the analysis of trends in its insurance and reinsurance operations. In addition to presenting net income determined in accordance with GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the company’s results of operations in a manner similar to how management analyzes the company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income.

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 a better measure of calculating shareholder returns than book value per share.

“Annualized net income return on average equity” (“ROAE”) is calculated using average equity, excluding the average after tax unrealized gains or losses on investments. Unrealized gains (losses) on investments are primarily the result of interest rate movements and the resultant impact on fixed income securities. Such gains (losses) are not related to management actions or operational performance, nor are they likely to be realized. Therefore, the company believes that excluding these unrealized gains (losses) provides a more consistent and useful measurement of operating performance, which supplements GAAP information. In calculating ROAE, the net income (loss) available to shareholders for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net income (loss) available to shareholders. The company presents ROAE as a

measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

“Annualized operating return on average equity” is calculated using operating income (as defined above and annualized in the manner described for net income (loss) available to shareholders under ROAE above), and average equity, excluding the average after tax unrealized gains (losses) on investments. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized return on average equity explanation above.

Reconciliations of these financial measures to their most directly comparable GAAP measures are included in the attached tables.

About Allied World Assurance Company

Allied World Assurance Company Holdings, Ltd, through its insurance subsidiaries, is a global provider of insurance and reinsurance solutions, offering superior client service through offices in Bermuda, the United States and Europe. Our insurance subsidiaries are rated A (Excellent) by A.M. Best Company and A- (Strong) by Standard & Poor’s. Our Bermuda and U.S. insurance subsidiaries are rated A2 (Good) by Moody’s Investors Service. For further information on Allied World Assurance Company, please visit our website at www.awac.com.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this press release reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; investigations of market practices and related settlement terms; negative rating agency actions; the adequacy of our loss reserves; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in our filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaim any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per share amounts)

		Quarter Ended September 30,								Nine Months Ended September 30,
		2007				2006				2007				2006
Revenues:
Gross premiums written		$	276,253			$	362,478			$	1,245,208			$	1,378,914
Premiums ceded			(56,956	)			(64,462	)			(281,480	)			(283,057	)
Net premiums written			219,297				298,016				963,728				1,095,857
Change in unearned premiums			64,362				19,743				(90,384	)			(163,638	)
Net premiums earned			283,659				317,759				873,344				932,219
Net investment income			76,133				61,407				222,718				178,351
Net realized investment losses			(4,196	)			(9,080	)			(12,161	)			(24,488	)
Total revenue			355,596				370,086				1,083,901				1,086,082
Expenses:
Net losses and loss expenses			173,246				180,934				515,466				566,738
Acquisition costs			29,198				37,785				90,266				106,920
General and administrative expenses			36,050				25,640				103,685				72,218
Interest expense			9,481				9,529				28,337				23,056
Foreign exchange gain			(976	)			(561	)			(412	)			(491	)
Total expenses			246,999				253,327				737,342				768,441
Income before income taxes			108,597				116,759				346,559				317,641
Income tax (recovery) expense			(362	)			2,774				392				3,164
NET INCOME		$	108,959			$	113,985			$	346,167			$	314,477
PER SHARE DATA:
Basic earnings per share		$	1.80			$	1.95			$	5.73			$	5.94
Diluted earnings per share		$	1.72			$	1.89			$	5.51			$	5.76
Weighted average common shares outstanding			60,413,019				58,376,307				60,381,867				52,900,664
Weighted average common shares and common share equivalents outstanding			63,250,024				60,451,643				62,808,186				54,577,445
Dividends declared per share		$	0.15			$	—			$	0.45			$	—

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except share and per share amounts)

		As of				As of
		September 30,				December 31,
		2007				2006
ASSETS:
Fixed maturity investments available for sale, at fair value (amortized cost:2007: $5,984,929; 2006: $5,188,379)		$	6,022,625			$	5,177,812
Other invested assets available for sale, at fair value (cost: 2007: $280,696; 2006: $245,657)			310,715				262,557
Total investments			6,333,340				5,440,369
Cash and cash equivalents			329,862				366,817
Restricted cash			46,903				138,223
Securities lending collateral			795,486				304,742
Insurance balances receivable			320,070				304,261
Prepaid reinsurance			178,951				159,719
Reinsurance recoverable			674,398				689,105
Accrued investment income			44,223				51,112
Deferred acquisition costs			123,932				100,326
Intangible assets			3,920				3,920
Balances receivable on sale of investments			7,951				16,545
Net deferred tax assets			3,661				5,094
Other assets			42,032				40,347
Total assets		$	8,904,729			$	7,620,580
LIABILITIES:
Reserve for losses and loss expenses		$	3,831,962			$	3,636,997
Unearned premiums			923,413				813,797
Unearned ceding commissions			30,822				23,914
Reinsurance balances payable			57,994				82,212
Securities lending payable			795,486				304,742
Balances due on purchase of investments			123,482				—
Senior notes			498,655				498,577
Accounts payable and accrued liabilities			30,140				40,257
Total liabilities		$	6,291,954			$	5,400,496
SHAREHOLDERS’ EQUITY:
Common stock, par value $0.03 per share, issued and outstanding 2007: 60,424,795 shares; 2006: 60,287,696 shares			1,812				1,809
Additional paid-in capital			1,839,849				1,822,607
Retained earnings			708,197				389,204
Accumulated other comprehensive income: net unrealized gains on investments, net of tax			62,917				6,464
Total shareholders’ equity			2,612,775				2,220,084
Total liabilities and shareholders’ equity		$	8,904,729			$	7,620,580

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA

(Expressed in thousands of United States dollars, except for ratio information)

Quarter Ended September 30, 2007		Property				Casualty				Reinsurance				Total
Gross premiums written		$	60,192			$	122,212			$	93,849			$	276,253
Net premiums written			32,400				92,917				93,980				219,297
Net premiums earned			44,246				114,977				124,436				283,659
Net losses and loss expenses			(29,271	)			(71,369	)			(72,606	)			(173,246	)
Acquisition costs			811				(2,927	)			(27,082	)			(29,198	)
General and administrative expenses			(8,421	)			(17,876	)			(9,753	)			(36,050	)
Underwriting income			7,365				22,805				14,995				45,165
Net investment income															76,133
Net realized investment losses															(4,196	)
Interest expense															(9,481	)
Foreign exchange gain															976
Income before income taxes														$	108,597
GAAP Ratios:
Loss and loss expense ratio			66.2	%			62.1	%			58.4	%			61.1	%
Acquisition cost ratio			(1.8	%)			2.5	%			21.8	%			10.3	%
General and administrative expense ratio			19.0	%			15.6	%			7.8	%			12.7	%
Combined ratio			83.4	%			80.2	%			88.0	%			84.1	%

Quarter Ended September 30, 2006		Property				Casualty				Reinsurance				Total
Gross premiums written		$	88,150			$	144,576			$	129,752			$	362,478
Net premiums written			40,855				127,893				129,268				298,016
Net premiums earned			46,576				135,186				135,997				317,759
Net losses and loss expenses			(28,917	)			(78,979	)			(73,038	)			(180,934	)
Acquisition costs			373				(7,301	)			(30,857	)			(37,785	)
General and administrative expenses			(6,273	)			(12,894	)			(6,473	)			(25,640	)
Underwriting income			11,759				36,012				25,629				73,400
Net investment income															61,407
Net realized investment losses															(9,080	)
Interest expense															(9,529	)
Foreign exchange gain															561
Income before income taxes														$	116,759
GAAP Ratios:
Loss and loss expense ratio			62.1	%			58.4	%			53.7	%			56.9	%
Acquisition cost ratio			(0.8	%)			5.4	%			22.7	%			11.9	%
General and administrative expense ratio			13.5	%			9.6	%			4.8	%			8.1	%
Combined ratio			74.8	%			73.4	%			81.2	%			76.9	%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)

Nine Months Ended September 30, 2007		Property				Casualty				Reinsurance				Total
Gross premiums written		$	318,520			$	435,492			$	491,196			$	1,245,208
Net premiums written			137,479				335,182				491,067				963,728
Net premiums earned			137,055				363,101				373,188				873,344
Net losses and loss expenses			(70,285	)			(222,644	)			(222,537	)			(515,466	)
Acquisition costs			374				(13,998	)			(76,642	)			(90,266	)
General and administrative expenses			(24,341	)			(49,894	)			(29,450	)			(103,685	)
Underwriting income			42,803				76,565				44,559				163,927
Net investment income															222,718
Net realized investment losses															(12,161	)
Interest expense															(28,337	)
Foreign exchange gain															412
Income before income taxes														$	346,559
GAAP Ratios:
Loss and loss expense ratio			51.3	%			61.3	%			59.6	%			59.0	%
Acquisition cost ratio			(0.3	%)			3.9	%			20.5	%			10.3	%
General and administrative expense ratio			17.8	%			13.7	%			7.9	%			11.9	%
Combined ratio			68.8	%			78.9	%			88.0	%			81.2	%

Nine Months Ended September 30, 2006		Property				Casualty				Reinsurance				Total
Gross premiums written		$	374,830			$	475,074			$	529,010			$	1,378,914
Net premiums written			152,808				414,812				528,237				1,095,857
Net premiums earned			141,633				400,488				390,098				932,219
Net losses and loss expenses			(86,965	)			(258,993	)			(220,780	)			(566,738	)
Acquisition costs			2,631				(23,575	)			(85,976	)			(106,920	)
General and administrative expenses			(18,233	)			(35,873	)			(18,112	)			(72,218	)
Underwriting income			39,066				82,047				65,230				186,343
Net investment income															178,351
Net realized investment losses															(24,488	)
Interest expense															(23,056	)
Foreign exchange gain															491
Income before income taxes														$	317,641
GAAP Ratios:
Loss and loss expense ratio			61.4	%			64.7	%			56.6	%			60.8	%
Acquisition cost ratio			(1.9	%)			5.9	%			22.0	%			11.5	%
General and administrative expense ratio			12.9	%			8.9	%			4.7	%			7.7	%
Combined ratio			72.4	%			79.5	%			83.3	%			80.0	%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)

		Quarter Ended September 30,								Nine Months Ended September 30,
		2007				2006				2007				2006
Net income		$	108,959			$	113,985			$	346,167			$	314,477
Net realized investment losses			4,196				9,080				12,161				24,488
Foreign exchange gain			(976	)			(561	)			(412	)			(491	)
Operating income		$	112,179			$	122,504			$	357,916			$	338,474
Weighted average common shares outstanding:
Basic			60,413,019				58,376,307				60,381,867				52,900,664
Diluted			63,250,024				60,451,643				62,808,186				54,577,445
Basic per share data:
Net income		$	1.80			$	1.95			$	5.73			$	5.94
Net realized investment losses			0.08				0.16				0.20				0.47
Foreign exchange gain			(0.02	)			(0.01	)			(0.00	)			(0.01	)
Operating income		$	1.86			$	2.10			$	5.93			$	6.40
Diluted per share data
Net income		$	1.72			$	1.89			$	5.51			$	5.76
Net realized investment losses			0.07				0.15				0.19				0.45
Foreign exchange gain			(0.02	)			(0.01	)			(0.00	)			(0.01	)
Operating income		$	1.77			$	2.03			$	5.70			$	6.20

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)

		As of				As of
		September 30,				December 31,
		2007				2006
Price per share at period end		$	51.91			$	43.63
Total shareholders’ equity			2,612,775				2,220,084
Basic common shares outstanding			60,424,795				60,287,696
Add: unvested restricted share units			822,450				704,372
Add: Long-Term Incentive Plan (LTIP) share units			886,251				342,501
Add: dilutive options/warrants outstanding			6,738,093				6,695,990
Weighted average exercise price per share		$	33.61			$	33.02
Deduct: options bought back via treasury method			(4,362,729	)			(5,067,534	)
Common shares and common share equivalents outstanding			64,508,860				62,963,025
Basic book value per common share		$	43.24			$	36.82
Diluted book value per common share		$	40.50			$	35.26

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS’ EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage information)

		Quarter Ended September 30,								Nine Months Ended September 30,
		2007				2006				2007				2006
Opening shareholders’ equity		$	2,418,186			$	1,565,062			$	2,220,084			$	1,420,266
Add/deduct: accumulated other comprehensive loss/(income)			25,663				83,144				(6,464	)			25,508
Adjusted opening shareholders’ equity			2,443,849				1,648,206				2,213,620				1,445,774
Closing shareholders’ equity			2,612,775				2,094,872				2,612,775				2,094,872
Deduct: accumulated other comprehensive income			(62,917	)			(3,447	)			(62,917	)			(3,447	)
Adjusted closing shareholders’ equity			2,549,858				2,091,425				2,549,858				2,091,425
Average shareholders’ equity		$	2,496,854			$	1,869,816			$	2,381,739			$	1,768,600
Net income available to shareholders		$	108,959			$	113,985			$	346,167			$	314,477
Annualized net income available to shareholders			435,836				455,940				461,556				419,303
Annualized return on average shareholders’ equity — net income available to shareholders			17.5	%			24.4	%			19.4	%			23.7	%
Operating income available to shareholders		$	112,179			$	122,504			$	357,916			$	338,474
Annualized operating income available to shareholders			448,716				490,016				477,221				451,299
Annualized return on average shareholders’ equity - operating income available to shareholders			18.0	%			26.2	%			20.0	%			25.5	%

     For further information, please contact:

Investor Contact:		Media Contact:
Keith J. Lennox		Jamie Tully/Susan Burns
Allied World Assurance Company Holdings, Ltd		Sard Verbinnen & Co
212-635-5319		212-687-8080
keith.lennox@awac.com		jtully@sardverb.com
		sburns@sardverb.com

Exhibit 99.2

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
3^rd Quarter, 2007

Investor Contact: Keith Lennox		This report is for informational purposes only. It should be read in conjunction with documents filed by Allied World Assurance Company Holdings, Ltd with the U.S. Securities and Exchange Commission.
Phone: (212) 635-5319
Fax: (212) 635-5532
email: keith.lennox@awac.com

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Any forward-looking statements made in this report reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; investigations of market practices and related settlement terms; negative rating agency actions; the adequacy of our loss reserves; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in our filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaim any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
FINANCIAL SUPPLEMENT TABLE OF CONTENTS

		Page
Basis of Presentation			4
I. Financial Highlights
- Consolidated Financial Highlights			5
II. Consolidated Results
- Consolidated Statements of Operations — Consecutive Quarters			6
- Consolidated Statements of Operations — Year to Date			7
- Consolidated Premium Distribution Analysis — Current Quarter			8
- Consolidated Premium Distribution Analysis — Year to Date			9
III. Segment Results
- Consolidated Segment Results — Current Quarter			10
- Consolidated Segment Results — Prior Year Quarter			11
- Consolidated Segment Results — Year to Date			12
- Consolidated Segment Results — Prior Year to Date			13
IV. Balance Sheet Details
- Consolidated Balance Sheets			14
- Consolidated Investment Portfolio			15
- Reserves for Losses and Loss Expenses			16
- Capital Structure and Leverage Ratios			17
V. Other
- Operating Income Reconciliation and Basic and Diluted Earnings per Share — Consecutive Quarters			18
- Operating Income Reconciliation and Basic and Diluted Earnings per Share — Year to Date			19
- Return on Average Shareholders’ Equity and Reconciliation of Shareholders’ Equity — Consecutive Quarters			20
- Return on Average Shareholders’ Equity and Reconciliation of Shareholders’ Equity — Year to Date			21
- Diluted Book Value per Share			22
- Annualized Investment Book Yield			23
- Regulation G			25

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION

- All financial information contained herein is unaudited.

- Unless otherwise noted, all data is in thousands of U.S. dollars, except for share, per share, percentage and ratio information.

- Allied World Assurance Company Holdings, Ltd, along with others in the industry, use underwriting ratios as measures of performance. The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned. The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned. The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned. The expense ratio is calculated by combining the acquisition cost ratio and the general and administrative expense ratio. The combined ratio is calculated by combining the loss ratio, the acquisition cost ratio and the general and administrative expense ratio. These ratios are relative measurements that describe for every $100 of net premiums earned or written, the cost of losses and expenses, respectively. The combined ratio presents the total cost per $100 of earned or written premium. A combined ratio below 100% demonstrates underwriting profit; a combined ratio above 100% demonstrates underwriting loss.

- In presenting the company’s results, management has included and discussed certain “non-GAAP” financial measures, as such term is defined in Regulation G promulgated by the SEC. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain 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, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“GAAP”). The reconciliation of such non-GAAP financial measures to their respective most directly comparable GAAP financial measures in accordance with Regulation G is included in this financial supplement. See page 25 for further details.

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
CONSOLIDATED FINANCIAL HIGHLIGHTS

					THREE MONTHS ENDED										NINE MONTHS ENDED									Previous				Previous
					SEPTEMBER 30,										SEPTEMBER, 30									Quarter				Year to Date
					2007					2006					2007					2006				Change				Change
HIGHLIGHTS		Gross premiums written			$	276,253				$	362,478				$	1,245,208				$	1,378,914				(23.8	%)			(9.7	%)
		Net premiums written				219,297					298,016					963,728					1,095,857				(26.4	%)			(12.1	%)
		Net premiums earned				283,659					317,759					873,344					932,219				(10.7	%)			(6.3	%)
		Net investment income				76,133					61,407					222,718					178,351				24.0	%			24.9	%
		Net income				108,959					113,985					346,167					314,477				(4.4	%)			10.1	%
		Operating income				112,179					122,504					357,916					338,474				(8.4	%)			5.7	%
		Total investments and cash & cash equivalents				6,710,105					5,862,515					6,710,105					5,862,515				14.5	%			14.5	%
		Total assets				8,904,729					8,012,893					8,904,729					8,012,893				11.1	%			11.1	%
		Total shareholders’ equity				2,612,775					2,094,872					2,612,775					2,094,872				24.7	%			24.7	%
		Cash flows from operating activities				229,699					248,956					618,811					667,402				(7.7	%)			(7.3	%)
PER SHARE AND SHARE DATA		Basic earnings per share
		Net income			$	1.80				$	1.95				$	5.73				$	5.94				(7.7	%)			(3.5	%)
		Operating income			$	1.86				$	2.10				$	5.93				$	6.40				(11.4	%)			(7.4	%)
		Diluted earnings per share
		Net income			$	1.72				$	1.89				$	5.51				$	5.76				(9.0	%)			(4.3	%)
		Operating income			$	1.77				$	2.03				$	5.70				$	6.20				(12.8	%)			(8.1	%)
		Weighted average common shares outstanding
		Basic				60,413,019					58,376,307					60,381,867					52,900,664
		Diluted				63,250,024					60,451,643					62,808,186					54,577,445
		Book value			$	43.24				$	34.75				$	43.24				$	34.75				24.4	%			24.4	%
		Diluted book value			$	40.50				$	33.54				$	40.50				$	33.54				20.8	%			20.8	%
FINANCIAL RATIOS		Return on average equity (ROAE), net income				17.5	%				24.4	%				19.4	%				23.7	%		(6.9)		pts		(4.3)		pts
		ROAE, operating income				18.0	%				26.2	%				20.0	%				25.5	%		(8.2)		pts		(5.5)		pts
		Annualized investment book yield				4.7	%				4.4	%				4.7	%				4.3	%		0.3		pts		0.4		pts
		Loss and loss expense ratio				61.1	%				56.9	%				59.0	%				60.8	%		4.2		pts		(1.8)		pts
		Acquisition cost ratio				10.3	%				11.9	%				10.3	%				11.5	%		(1.6)		pts		(1.2)		pts
		General and administrative expense ratio				12.7	%				8.1	%				11.9	%				7.7	%		4.6		pts		4.2		pts
		Expense ratio				23.0	%				20.0	%				22.2	%				19.2	%		3.0		pts		3.0		pts
		Combined ratio				84.1	%				76.9	%				81.2	%				80.0	%		7.2		pts		1.2		pts

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS — CONSECUTIVE QUARTERS

		THREE MONTHS ENDED				THREE MONTHS ENDED				THREE MONTHS ENDED				THREE MONTHS ENDED				THREE MONTHS ENDED
		SEPTEMBER 30, 2007				JUNE 30, 2007				MARCH 31, 2007				DECEMBER 31, 2006				SEPTEMBER 30, 2006
Revenues
Gross premiums written		$	276,253			$	530,549			$	438,406			$	280,111			$	362,478
Net premiums written		$	219,297			$	386,587			$	357,844			$	210,739			$	298,016
Net premiums earned		$	283,659			$	303,119			$	286,566			$	319,791			$	317,759
Net investment income			76,133				73,937				72,648				66,009				61,407
Net realized investment losses			(4,196	)			(1,481	)			(6,484	)			(4,190	)			(9,080	)
Total revenues		$	355,596			$	375,575			$	352,730			$	381,610			$	370,086
Expenses
Net losses and loss expenses:
Current year		$	201,799			$	208,643			$	192,102			$	215,456			$	219,616
Prior years		$	(28,553	)		$	(32,418	)			(26,107	)			(43,061	)			(38,682	)
Total net losses and loss expenses			173,246				176,225				165,995				172,395				180,934
Acquisition costs			29,198				31,872				29,196				34,568				37,785
General and administrative expenses			36,050				34,432				33,203				33,856				25,640
Foreign exchange (gain) loss			(976	)			532				32				1,092				(561	)
Interest expense			9,481				9,482				9,374				9,510				9,529
Total expenses		$	246,999			$	252,543			$	237,800			$	251,421			$	253,327
Income before income taxes		$	108,597			$	123,032			$	114,930			$	130,189			$	116,759
Income tax (recovery) expense			(362	)			(255	)			1,009				1,827				2,774
Net income		$	108,959			$	123,287			$	113,921			$	128,362			$	113,985
GAAP Ratios
Loss and loss expense ratio			61.1	%			58.1	%			57.9	%			53.9	%			56.9	%
Acquisition cost ratio			10.3	%			10.5	%			10.2	%			10.8	%			11.9	%
General and administrative expense ratio			12.7	%			11.4	%			11.6	%			10.6	%			8.1	%
Expense ratio			23.0	%			21.9	%			21.8	%			21.4	%			20.0	%
Combined ratio			84.1	%			80.0	%			79.7	%			75.3	%			76.9	%
Per Share Data
Basic earnings per share
Net income		$	1.80			$	2.04			$	1.89			$	2.13			$	1.95
Operating income		$	1.86			$	2.07			$	2.00			$	2.22			$	2.10
Diluted earnings per share
Net income		$	1.72			$	1.96			$	1.83			$	2.04			$	1.89
Operating income		$	1.77			$	1.99			$	1.94			$	2.12			$	2.03

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS — YEAR TO DATE

		NINE MONTHS ENDED				NINE MONTHS ENDED
		SEPTEMBER 30, 2007				SEPTEMBER 30, 2006
Revenues
Gross premiums written		$	1,245,208			$	1,378,914
Net premiums written			963,728				1,095,857
Net premiums earned		$	873,344			$	932,219
Net investment income		$	222,718				178,351
Net realized investment losses		$	(12,161	)			(24,488	)
Total revenues		$	1,083,901			$	1,086,082
Expenses
Net losses and loss expenses:
Current year		$	602,544			$	634,394
Prior years			(87,078	)			(67,656	)
Total net losses and loss expenses			515,466			$	566,738
Acquisition costs			90,266				106,920
General and administrative expenses			103,685				72,218
Foreign exchange gain			(412	)			(491	)
Interest expense			28,337				23,056
Total expenses		$	737,342			$	768,441
Income before income taxes		$	346,559			$	317,641
Income tax expense			392				3,164
Net income		$	346,167			$	314,477
GAAP Ratios
Loss and loss expense ratio			59.0	%			60.8	%
Acquisition cost ratio			10.3	%			11.5	%
General and administrative expense ratio			11.9	%			7.7	%
Expense ratio			22.2	%			19.2	%
Combined ratio			81.2	%			80.0	%
Per Share Data
Basic earnings per share
Net income		$	5.73			$	5.94
Operating income		$	5.93			$	6.40
Diluted earnings per share
Net income		$	5.51			$	5.76
Operating income		$	5.70			$	6.20

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
CONSOLIDATED PREMIUM DISTRIBUTION ANALYSIS — CURRENT QUARTER

THREE MONTHS ENDED SEPTEMBER 30, 2007		THREE MONTHS ENDED SEPTEMBER 30, 2006
Gross Premiums Written = $276,253		Gross Premiums Written = $362,478

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
CONSOLIDATED PREMIUM DISTRIBUTION ANALYSIS — YEAR TO DATE

NINE MONTHS ENDED SEPTEMBER 30, 2007		NINE MONTHS ENDED SEPTEMBER 30, 2006
Gross Premiums Written = $1,245,208		Gross Premiums Written = $1,378,914

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
CONSOLIDATED SEGMENT RESULTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007

														CONSOLIDATED
		PROPERTY				CASUALTY				REINSURANCE				TOTALS
Revenues
Gross premiums written		$	60,192			$	122,212			$	93,849			$	276,253
Net premiums written		$	32,400			$	92,917			$	93,980			$	219,297
Net premiums earned		$	44,246			$	114,977			$	124,436			$	283,659
Total revenues		$	44,246			$	114,977			$	124,436			$	283,659
Expenses
Net losses and loss expenses:
Current year		$	42,203			$	83,773			$	75,823			$	201,799
Prior years			(12,932	)			(12,404	)			(3,217	)			(28,553	)
Total net losses and loss expenses			29,271				71,369				72,606				173,246
Acquisition costs			(811	)			2,927				27,082				29,198
General and administrative expenses			8,421				17,876				9,753				36,050
Total expenses		$	36,881			$	92,172			$	109,441			$	238,494
Underwriting Income		$	7,365			$	22,805			$	14,995			$	45,165
Net investment income															76,133
Net realized investment losses															(4,196	)
Interest expense															(9,481	)
Foreign exchange gain															976
Income before income taxes														$	108,597
GAAP Ratios
Loss and loss expense ratio			66.2	%			62.1	%			58.4	%			61.1	%
Acquisition cost ratio			(1.8	%)			2.5	%			21.8	%			10.3	%
General and administrative expense ratio			19.0	%			15.6	%			7.8	%			12.7	%
Expense ratio			17.2	%			18.1	%			29.6	%			23.0	%
Combined ratio			83.4	%			80.2	%			88.0	%			84.1	%