PROSPECTUS SUPPLEMENT NO. 3		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. 3 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. 3 includes a Current Report on Form 8-K filed with the SEC on August 8, 2007. The Form 8-K includes an earnings release announcing the issuer’s financial results for the fiscal quarter ended June 30, 2007.

     You should read this Prospectus Supplement No. 3 in conjunction with the Market-Making Prospectus. This Prospectus Supplement No. 3 updates information in the Market-Making Prospectus and, accordingly, to the extent inconsistent, the information in this Prospectus Supplement No. 3 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. 3 is August 8, 2007.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

Current Report
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 7, 2007

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

(Exact Name of Registrant as Specified in Charter)

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 August 7, 2007, Allied World Assurance Company Holdings, Ltd issued a press release reporting its second quarter 2007 results and the availability of its second 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 August 7, 2007, reporting second quarter results.
99.2		Second 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 August 7, 2007, reporting second quarter results.
99.2		Second Quarter 2007 Financial Supplement.

EXHIBIT 99.1

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD REPORTS SECOND
QUARTER 2007 OPERATING RESULTS; DECLARES QUARTERLY DIVIDEND
OF $0.15 PER COMMON SHARE

PEMBROKE, BERMUDA, August 7, 2007 - Allied World Assurance Company Holdings, Ltd (NYSE: AWH) today reported net income of $123.3 million, or $1.96 per diluted share, for the second quarter 2007 compared to net income of $102.4 million, or $2.02 per diluted share, for the second quarter 2006. Net income for the six months ended June 30, 2007 was $237.2 million, or $3.81 per diluted share, compared to net income of $200.5 million, or $3.96 per diluted share, for the first six months of 2006.

The company reported operating income of $125.3 million, or $1.99 per diluted share, for the second quarter 2007 compared to operating income of $112.1 million, or $2.21 per diluted share, for the second quarter 2006. Operating income for the six months ended June 30, 2007 was $245.7 million, or $3.95 per diluted share, compared to operating income of $216.0 million, or $4.26 per diluted share, for the first six 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.

President and Chief Executive Officer Scott Carmilani commented, “Allied World continues to produce impressive results and generate strong book value growth for our shareholders. This is our sixth consecutive quarter with operating income in excess of $100 million and annualized operating income and net income return on average equity in excess of 20%. Enhancing the strong underwriting performance achieved in each of our business segments, we continue to reap the benefits of historically strong operating cash flows and significant investment income momentum.”

Mr. Carmilani added, “Despite the challenging market conditions that currently exist, we expect continued strong performance going forward as we continue to leverage our global operating platforms and diversified product lines to retain attractive business and find new opportunities that meet our return targets. We continue to be supported by strong ratings, a conservative balance sheet and an expanding invested asset base.”

Underwriting Results

Gross premiums written were $530.5 million in the second quarter 2007, a 2.4% increase compared to $518.3 million in the second quarter 2006. This increase was primarily due to increased gross premiums written in the reinsurance segment, which was a result of the early renewal of one large treaty that previously renewed in the third quarter of 2006. For the six months ended June 30, 2007, gross premiums written totaled $969.0 million, a 4.7% decrease compared to $1,016.4 million in the first six months of 2006. Gross premiums written for both the three and six months ended June 30, 2007 were reduced by the non-renewal of business that did not meet our underwriting requirements (which included pricing and/or policy terms and conditions), increased competition and decreasing rates for new and renewal business.

Net premiums written were $386.6 million in the second quarter 2007, a 4.4% increase compared to $370.3 million in the second quarter 2006. The increase in net premiums written was primarily due to increased gross premiums written in the reinsurance segment and a reduction in ceded premiums in the company’s property segment. For the six months ended June 30, 2007, net premiums written totaled $744.4 million, a 6.7% decrease compared to $797.8 million in the first six months of 2006. The decrease in net premiums written reflected the decrease in gross premiums written and the increased utilization of reinsurance in the casualty segment.

Net premiums earned in the second quarter 2007 were $303.1 million, a 0.8% decrease compared to $305.5 million for the second quarter 2006. For the six months ended June 30, 2007, net premiums earned totaled $589.7 million, a 4.0% decrease from net premiums earned of $614.5 million in the first six months of 2006. These decreases also reflect the increased utilization of reinsurance in the casualty segment.

The combined ratio was 80.0% in the second quarter 2007 compared to 78.2% in second quarter 2006. The loss and loss expense ratio was 58.1% in the second quarter 2007 compared to 58.9% in the second quarter 2006. During the second quarter 2007, the company recorded net favorable reserve development on prior accident years of $32.4 million, a benefit of 10.7 percentage points to the company’s loss ratio for this quarter. In the second quarter 2006, the company recorded net favorable reserve development on prior accident years of $29.0 million, a benefit of 9.5 percentage points to the company’s loss ratio for that quarter. The combined ratio for the six months ended June 30, 2007 was 79.9% compared to 81.6% for the first six months of 2006.

Investment Results

Net investment income in the second quarter 2007 was $73.9 million, an increase of 34.6% over the $54.9 million of net investment income in the second quarter 2006. For the six months ended June 30, 2007, net investment income was $146.6 million, an increase of 25.3% over the $116.9 million of net investment income in the first six months of 2006. These increases primarily reflect the growth in the company’s invested asset base driven by positive operating cash flows, the proceeds from the company’s July 2006 initial public offering and increased interest rates. During the second quarter 2007, the company recorded net realized investment losses of $1.5 million compared to net realized investment losses of $10.2 million in the second quarter 2006. For the six months ended June 30, 2007, net realized investment losses were $8.0 million compared to net realized investment losses of $15.4 million in the first six months of 2006.

Shareholders’ Equity

As of June 30, 2007, shareholders’ equity was $2.4 billion compared to $2.2 billion reported at December 31, 2006. Diluted book value per share was $37.52 as of June 30, 2007. The company’s annualized net income return on average equity for the three and six months ended June 30, 2007 was 20.7% and 20.4 %, respectively. The company’s annualized operating return on average equity

for the three and six months ended June 30, 2007 was 21.0% and 21.1%, respectively.

Quarterly Dividend

Allied World’s board of directors has declared a quarterly dividend of $0.15 per common share. The dividend will be payable on September 13, 2007 to shareholders of record as of the close of business on August 28, 2007.

Conference Call

Allied World will host a conference call on Wednesday, August 8, 2007 at 8:30 a.m. (Eastern Time) to discuss its second 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) 314-5050 (U.S. and Canada callers) or (617) 213-8051 (international callers) and entering the passcode 47056208 approximately ten minutes prior to the call.

Following the conclusion of the presentation, a replay of the call will be available through Wednesday, August 22, 2007 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 82915625. In addition, the webcast will remain available online through Wednesday, August 22, 2007 at www.awac.com.

Financial Supplement

A financial supplement relating to the second 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 June 30,								Six Months Ended June 30,
		2007				2006				2007				2006
Revenues:
Gross premiums written		$	530,549			$	518,316			$	968,955			$	1,016,436
Premiums ceded			(143,962	)			(147,978	)			(224,524	)			(218,595	)
Net premiums written			386,587				370,338				744,431				797,841
Change in unearned premiums			(83,468	)			(64,821	)			(154,746	)			(183,381	)
Net premiums earned			303,119				305,517				589,685				614,460
Net investment income			73,937				54,943				146,585				116,944
Net realized investment losses			(1,481	)			(10,172	)			(7,965	)			(15,408	)
Total revenue			375,575				350,288				728,305				715,996
Expenses:
Net losses and loss expenses			176,225				179,844				342,220				385,804
Acquisition costs			31,872				32,663				61,068				69,135
General and administrative expenses			34,432				26,257				67,635				46,579
Interest expense			9,482				7,076				18,856				13,527
Foreign exchange loss (gain)			532				(475	)			564				70
Total expenses			252,543				245,365				490,343				515,115
Income before income taxes			123,032				104,923				237,962				200,881
Income tax (recovery) expense			(255	)			2,553				754				390
NET INCOME		$	123,287			$	102,370			$	237,208			$	200,491
PER SHARE DATA:
Basic earnings per share		$	2.04			$	2.04			$	3.95			$	4.00
Diluted earnings per share		$	1.96			$	2.02			$	3.81			$	3.96
Weighted average common shares outstanding			60,397,591				50,162,842				60,028,523				50,162,842
Weighted average common shares and common share equivalents outstanding			62,874,235				50,682,557				62,277,010				50,637,809
Dividends declared per share		$	0.15			$	—			$	0.30			$	—

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
		June 30,				December 31,
		2007				2006
ASSETS:
Fixed maturity investments available for sale, at fair value (amortized cost: 2007: $5,737,857; 2006: $5,188,379)		$	5,689,348			$	5,177,812
Other invested assets available for sale, at fair value (cost: 2007: $202,016; 2006: $245,657)			227,173				262,557
Total investments			5,916,521				5,440,369
Cash and cash equivalents			270,571				366,817
Restricted cash			51,896				138,223
Securities lending collateral			503,517				304,742
Insurance balances receivable			450,612				304,261
Prepaid reinsurance			209,522				159,719
Reinsurance recoverable			679,198				689,105
Accrued investment income			56,355				51,112
Deferred acquisition costs			131,368				100,326
Intangible assets			3,920				3,920
Balances receivable on sale of investments			53,089				16,545
Net deferred tax assets			3,863				5,094
Other assets			45,175				40,347
Total assets		$	8,375,607			$	7,620,580
LIABILITIES:
Reserve for losses and loss expenses		$	3,743,680			$	3,636,997
Unearned premiums			1,018,347				813,797
Unearned ceding commissions			35,612				23,914
Reinsurance balances payable			122,344				82,212
Securities lending payable			503,517				304,742
Balances due on purchase of investments			21				—
Senior notes			498,629				498,577
Accounts payable and accrued liabilities			35,271				40,257
Total liabilities		$	5,957,421			$	5,400,496
SHAREHOLDERS’ EQUITY:
Common stock, par value $0.03 per share, issued and outstanding 2007: 60,405,307 shares; 2006: 60,287,696 shares			1,812				1,809
Additional paid-in capital			1,833,737				1,822,607
Retained earnings			608,300				389,204
Accumulated other comprehensive (loss) income: net unrealized (losses) gains on investments, net of tax			(25,663	)			6,464
Total shareholders’ equity			2,418,186				2,220,084
Total liabilities and shareholders’ equity		$	8,375,607			$	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 June 30, 2007		Property				Casualty				Reinsurance				Total
Gross premiums written		$	156,463			$	188,091			$	185,995			$	530,549
Net premiums written			58,947				141,620				186,020				386,587
Net premiums earned			48,318				123,715				131,086				303,119
Net losses and loss expenses			(34,149	)			(60,908	)			(81,168	)			(176,225	)
Acquisition costs			(105	)			(5,033	)			(26,734	)			(31,872	)
General and administrative expenses			(8,163	)			(16,711	)			(9,558	)			(34,432	)
Underwriting income			5,901				41,063				13,626				60,590
Net investment income															73,937
Net realized investment losses															(1,481	)
Interest expense															(9,482	)
Foreign exchange loss															(532	)
Income before income taxes														$	123,032
GAAP Ratios:
Loss and loss expense ratio			70.7	%			49.2	%			61.9	%			58.1	%
Acquisition cost ratio			0.2	%			4.1	%			20.4	%			10.5	%
General and administrative expense ratio			16.9	%			13.5	%			7.3	%			11.4	%
Combined ratio			87.8	%			66.8	%			89.6	%			80.0	%

Quarter Ended June 30, 2006		Property				Casualty				Reinsurance				Total
Gross premiums written		$	166,861			$	200,004			$	151,451			$	518,316
Net premiums written			44,756				172,725				152,857				370,338
Net premiums earned			45,955				133,321				126,241				305,517
Net losses and loss expenses			(24,729	)			(82,411	)			(72,704	)			(179,844	)
Acquisition costs			777				(6,955	)			(26,485	)			(32,663	)
General and administrative expenses			(6,845	)			(13,118	)			(6,294	)			(26,257	)
Underwriting income			15,158				30,837				20,758				66,753
Net investment income															54,943
Net realized investment losses															(10,172	)
Interest expense															(7,076	)
Foreign exchange gain															475
Income before income taxes														$	104,923
GAAP Ratios:
Loss and loss expense ratio			53.8	%			61.8	%			57.6	%			58.9	%
Acquisition cost ratio			(1.7	%)			5.2	%			21.0	%			10.7	%
General and administrative expense ratio			14.9	%			9.9	%			5.0	%			8.6	%
Combined ratio			67.0	%			76.9	%			83.6	%			78.2	%

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

Six Months Ended June 30, 2007		Property				Casualty				Reinsurance				Total
Gross premiums written		$	258,328			$	313,280			$	397,347			$	968,955
Net premiums written			105,079				242,265				397,087				744,431
Net premiums earned			92,809				248,124				248,752				589,685
Net losses and loss expenses			(41,014	)			(151,275	)			(149,931	)			(342,220	)
Acquisition costs			(437	)			(11,071	)			(49,560	)			(61,068	)
General and administrative expenses			(15,920	)			(32,018	)			(19,697	)			(67,635	)
Underwriting income			35,438				53,760				29,564				118,762
Net investment income															146,585
Net realized investment losses															(7,965	)
Interest expense															(18,856	)
Foreign exchange loss															(564	)
Income before income taxes														$	237,962
GAAP Ratios:
Loss and loss expense ratio			44.2	%			61.0	%			60.3	%			58.0	%
Acquisition cost ratio			0.4	%			4.4	%			19.9	%			10.4	%
General and administrative expense ratio			17.2	%			12.9	%			7.9	%			11.5	%
Combined ratio			61.8	%			78.3	%			88.1	%			79.9	%

Six Months Ended June 30, 2006		Property				Casualty				Reinsurance				Total
Gross premiums written		$	286,680			$	330,498			$	399,258			$	1,016,436
Net premiums written			111,953				286,919				398,969				797,841
Net premiums earned			95,057				265,303				254,100				614,460
Net losses and loss expenses			(58,048	)			(180,014	)			(147,742	)			(385,804	)
Acquisition costs			2,258				(16,274	)			(55,119	)			(69,135	)
General and administrative expenses			(11,960	)			(22,980	)			(11,639	)			(46,579	)
Underwriting income			27,307				46,035				39,600				112,942
Net investment income															116,944
Net realized investment losses															(15,408	)
Interest expense															(13,527	)
Foreign exchange loss															(70	)
Income before income taxes														$	200,881
GAAP Ratios:
Loss and loss expense ratio			61.1	%			67.9	%			58.1	%			62.8	%
Acquisition cost ratio			(2.4	%)			6.1	%			21.7	%			11.2	%
General and administrative expense ratio			12.6	%			8.7	%			4.6	%			7.6	%
Combined ratio			71.3	%			82.7	%			84.4	%			81.6	%

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 June 30,								Six Months Ended June 30,
		2007				2006				2007				2006
Net income		$	123,287			$	102,370			$	237,208			$	200,491
Net realized investment losses			1,481				10,172				7,965				15,408
Foreign exchange loss (gain)			532				(475	)			564				70
Operating income		$	125,300			$	112,067			$	245,737			$	215,969
Weighted average common shares outstanding:
Basic			60,397,591				50,162,842				60,028,523				50,162,842
Diluted			62,874,235				50,682,557				62,277,010				50,637,809
Basic per share data:
Net income		$	2.04			$	2.04			$	3.95			$	4.00
Net realized investment losses			0.02				0.20				0.13				0.31
Foreign exchange loss (gain)			0.01				(0.01	)			0.01				—
Operating income		$	2.07			$	2.23			$	4.09			$	4.31
Diluted per share data
Net income		$	1.96			$	2.02			$	3.81			$	3.96
Net realized investment losses			0.02				0.20				0.13				0.30
Foreign exchange loss (gain)			0.01				(0.01	)			0.01				—
Operating income		$	1.99			$	2.21			$	3.95			$	4.26

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
		June 30,				December 31,
		2007				2006
Price per share at period end		$	51.25			$	43.63
Total shareholders’ equity			2,418,186				2,220,084
Basic common shares outstanding			60,405,307				60,287,696
Add: unvested restricted share units			828,657				704,372
Add: Long-Term Incentive Plan (LTIP) share units			886,251				342,501
Add: dilutive options/warrants outstanding			6,764,564				6,695,990
Weighted average exercise price per share		$	33.59			$	33.02
Deduct: options bought back via treasury method			(4,433,857	)			(5,067,534	)
Common shares and common share equivalents outstanding			64,450,922				62,963,025
Basic book value per common share		$	40.03			$	36.82
Diluted book value per common share		$	37.52			$	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 June 30,								Six Months Ended June 30,
		2007				2006				2007				2006
Opening shareholders’ equity		$	2,355,978			$	1,478,907			$	2,220,084			$	1,420,266
(Deduct)/add: accumulated other comprehensive (income)/loss			(31,481	)			64,988				(6,464	)			25,508
Adjusted opening shareholders’ equity			2,324,497				1,543,895				2,213,620				1,445,774
Closing shareholders’ equity			2,418,186				1,565,062				2,418,186				1,565,062
Add: accumulated other comprehensive loss			25,663				83,144				25,663				83,144
Adjusted closing shareholders’ equity			2,443,849				1,648,206				2,443,849				1,648,206
Average shareholders’ equity		$	2,384,173			$	1,596,051			$	2,328,735			$	1,546,990
Net income available to shareholders		$	123,287			$	102,370			$	237,208			$	200,491
Annualized net income available to shareholders			493,148				409,480				474,416				400,982
Annualized return on average shareholders’ equity — net income available to shareholders			20.7	%			25.7	%			20.4	%			25.9	%
Operating income available to shareholders		$	125,300			$	112,067			$	245,737			$	215,969
Annualized operating income available to shareholders			501,200				448,268				491,474				431,938
Annualized return on average shareholders’ equity — operating income available to shareholders			21.0	%			28.1	%			21.1	%			27.9	%

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

2^nd 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										SIX MONTHS ENDED									Previous								Previous
							JUNE 30,										JUNE 30,									Quarter								Year to Date
							2007					2006					2007					2006				Change								Change
HIGHLIGHTS				Gross premiums written			$	530,549				$	518,316				$	968,955				$	1,016,436				2.4	%							(4.7	%)
				Net premiums written				386,587					370,338					744,431					797,841				4.4	%							(6.7	%)
				Net premiums earned				303,119					305,517					589,685					614,460				(0.8	%)							(4.0	%)
				Net investment income				73,937					54,943					146,585					116,944				34.6	%							25.3	%
				Net income				123,287					102,370					237,208					200,491				20.4	%							18.3	%
				Operating income				125,300					112,067					245,737					215,969				11.8	%							13.8	%
				Total investments and cash & cash equivalents				6,238,988					5,310,325					6,238,988					5,310,325				17.5	%							17.5	%
				Total assets				8,375,607					7,393,386					8,375,607					7,393,386				13.3	%							13.3	%
				Total shareholders’ equity				2,418,186					1,565,062					2,418,186					1,565,062				54.5	%							54.5	%
				Cash flows from operating activities				231,314					231,348					389,112					418,446				0.0	%							(7.0	%)
PER SHARE AND SHARE DATA				Basic earnings per share
				Net income			$	2.04				$	2.04				$	3.95				$	4.00				0.0	%							(1.3	%)
				Operating income			$	2.07				$	2.23				$	4.09				$	4.31				(7.2	%)							(5.1	%)
				Diluted earnings per share
				Net income			$	1.96				$	2.02				$	3.81				$	3.96				(3.0	%)							(3.8	%)
				Operating income			$	1.99				$	2.21				$	3.95				$	4.26				(10.0	%)							(7.3	%)
				Weighted average common shares outstanding
				Basic				60,397,591					50,162,842					60,028,523					50,162,842
				Diluted				62,874,235					50,682,557					62,277,010					50,637,809
				Book value			$	40.03				$	31.20				$	40.03				$	31.20				28.3	%							28.3	%
				Diluted book value			$	37.52				$	30.79				$	37.52				$	30.79				21.9	%							21.9	%
FINANCIAL RATIOS				Return on average equity (ROAE), net income				20.7	%				25.7	%				20.4	%				25.9	%			(5.0	) pts							(5.5	) pts
				ROAE, operating income				21.0	%				28.1	%				21.1	%				27.9	%			(7.1	) pts							(6.8	) pts
				Annualized investment book yield				4.8	%				4.2	%				4.7	%				4.3	%			0.5	pts							0.4	pts
				Loss and loss expense ratio				58.1	%				58.9	%				58.0	%				62.8	%			(0.8	) pts							(4.8	) pts
				Acquisition cost ratio				10.5	%				10.7	%				10.4	%				11.2	%			(0.2	) pts							(0.8	) pts
				General and administrative expense ratio				11.4	%				8.6	%				11.5	%				7.6	%			2.8	pts							3.9	pts
				Expense ratio				21.9	%				19.3	%				21.9	%				18.8	%			2.6	pts							3.1	pts
				Combined ratio				80.0	%				78.2	%				79.9	%				81.6	%			1.8	pts							(1.7	) 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
		JUNE 30, 2007				MARCH 31, 2007				DECEMBER 31, 2006				SEPTEMBER 30, 2006				JUNE 30, 2006
Revenues
Gross premiums written		$	530,549			$	438,406			$	280,111			$	362,478			$	518,316
Net premiums written		$	386,587			$	357,844			$	210,739			$	298,016			$	370,338
Net premiums earned		$	303,119			$	286,566			$	319,791			$	317,759			$	305,517
Net investment income			73,937				72,648				66,009				61,407				54,943
Net realized investment losses			(1,481	)			(6,484	)			(4,190	)			(9,080	)			(10,172	)
Total revenues		$	375,575			$	352,730			$	381,610			$	370,086			$	350,288
Expenses
Net losses and loss expenses:
Current year		$	208,643			$	192,102			$	215,456			$	219,616			$	208,817
Prior years		$	(32,418	)			(26,107	)			(43,061	)			(38,682	)			(28,973	)
Total net losses and loss expenses			176,225				165,995				172,395				180,934				179,844
Acquisition costs			31,872				29,196				34,568				37,785				32,663
General and administrative expenses			34,432				33,203				33,856				25,640				26,257
Foreign exchange loss (gain)			532				32				1,092				(561	)			(475	)
Interest expense			9,482				9,374				9,510				9,529				7,076
Total expenses		$	252,543			$	237,800			$	251,421			$	253,327			$	245,365
Income before income taxes		$	123,032			$	114,930			$	130,189			$	116,759			$	104,923
Income tax (recovery) expense			(255	)			1,009				1,827				2,774				2,553
Net income		$	123,287			$	113,921			$	128,362			$	113,985			$	102,370
GAAP Ratios
Loss and loss expense ratio			58.1	%			57.9	%			53.9	%			56.9	%			58.9	%
Acquisition cost ratio			10.5	%			10.2	%			10.8	%			11.9	%			10.7	%
General and administrative expense ratio			11.4	%			11.6	%			10.6	%			8.1	%			8.6	%
Expense ratio			21.9	%			21.8	%			21.4	%			20.0	%			19.3	%
Combined ratio			80.0	%			79.7	%			75.3	%			76.9	%			78.2	%
Per Share Data
Basic earnings per share
Net income		$	2.04			$	1.89			$	2.13			$	1.95			$	2.04
Operating income		$	2.07			$	2.00			$	2.22			$	2.10			$	2.23
Diluted earnings per share
Net income		$	1.96			$	1.83			$	2.04			$	1.89			$	2.02
Operating income		$	1.99			$	1.94			$	2.12			$	2.03			$	2.21

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

		SIX MONTHS ENDED				SIX MONTHS ENDED
		JUNE 30, 2007				JUNE 30, 2006
Revenues
Gross premiums written		$	968,955			$	1,016,436
Net premiums written			744,431				797,841
Net premiums earned		$	589,685			$	614,460
Net investment income			146,585				116,944
Net realized investment losses			(7,965	)			(15,408	)
Total revenues		$	728,305			$	715,996
Expenses
Net losses and loss expenses:
Current year		$	400,745			$	414,777
Prior years			(58,525	)			(28,973	)
Total net losses and loss expenses			342,220				385,804
Acquisition costs			61,068				69,135
General and administrative expenses			67,635				46,579
Foreign exchange loss			564				70
Interest expense			18,856				13,527
Total expenses		$	490,343			$	515,115
Income before income taxes		$	237,962			$	200,881
Income tax expense			754				390
Net income		$	237,208			$	200,491
GAAP Ratios
Loss and loss expense ratio			58.0	%			62.8	%
Acquisition cost ratio			10.4	%			11.2	%
General and administrative expense ratio			11.5	%			7.6	%
Expense ratio			21.9	%			18.8	%
Combined ratio			79.9	%			81.6	%
Per Share Data
Basic earnings per share
Net income		$	3.95			$	4.00
Operating income		$	4.09			$	4.31
Diluted earnings per share
Net income		$	3.81			$	3.96
Operating income		$	3.95			$	4.26

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

THREE MONTHS ENDED JUNE 30, 2007		THREE MONTHS ENDED JUNE 30, 2006
Gross Premiums Written = $530,549		Gross Premiums Written = $518,316

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

SIX MONTHS ENDED JUNE 30, 2007		SIX MONTHS ENDED JUNE 30, 2006
Gross Premiums Written = $968,955		Gross Premiums Written = $1,016,436