Allied World Assurance Company Holdings Ltd.'s profits rose by more than $70 million over the second quarter 2010 driven by a strong investment portfolio and solid underwriting results.

The Bermuda-based insurer reported a net income of $184 million, or $3.47 per share, for the second quarter compared to $113.7 million, or $2.22 per share, for the second quarter of 2009.

Net income for the six months ended June 30, 2010 was also up at $317.7 million, or $5.98 per share, versus $245.1 million, or $4.79 per share, for the first six months of last year.

Allied World's president and CEO Scott Carmilani said: "We are very pleased with the company's profitable results for the first half of the year despite the impact of unprecedented industry loss activity and the increasingly competitive pricing environment. Our profitable results continue to be driven by our strong investment portfolio and our historically prudent and responsible underwriting philosophy. Our ability to generate $318 million in net income through the first half of the year, combined with our share repurchase initiative, has resulted in the company's diluted book value increasing to over $65 per share, up over nine percent from the beginning of the year.

"I am also very pleased that during the quarter we were able to announce our establishment of Syndicate 2232 at Lloyd's of London. This is another important accomplishment for our company as we expand our global reach."

The company posted operating income of $95.7 million, or $1.80 per share, for the second quarter of 2010 compared to $112.8 million, or $2.20 per share, for the same period in 2009, down mainly due to weather-related losses as well as the impact of a mine collapse, which reduced operating income by $30 million, or 57 cents per share, during the quarter.

The company's gross premiums written rose 0.2 percent to $493.8 million in the second quarter from $492.8 million last year.

The combined ratio for the second quarter was 87 percent versus 82.8 percent in the second quarter of 2009.

The total return on the company's investment portfolio for the three and six months ended June 30, 2010 was approximately two percent and 3.9 percent respectively. Net investment income in the second quarter of 2010 was $65.6 million, a decrease of 14.3 percent from the $76.5 million recorded in last year's second quarter.

As of June 30, 2010, Allied World's total shareholders' equity was $3.5 billion, up 7.9 percent from $3.2 billion on December 31, 2009, primarily driven by strong investment returns.

During the second quarter of 2010, the company announced a $500 million share repurchase programme, buying back 1,081,041 of its shares in the open market at an average repurchase price of $45.41 per share for an aggregate cost of $49.1 million during the second quarter.

The company also announced yesterday that its board of directors had declared a quarterly dividend of 20 cents per share, payable on September 9, 2010 to shareholders of record on August 24, 2010.