Allied World has reported a 79.9 percent combined ratio for the first quarter of 2014, an achievement which has pleased chief executive officer Scott Carmilani as earnings crushed analysts’ expectations.

The Switzerland-headquartered re/insurer’s underwriting income grew 55.7 percent, pushing operating profits for the first quarter up to $129.9 million, as well as a 7.7 percent increase in gross written premiums to $901.4 million.

Operating earnings were $3.84 a share, compared to $2.38 a share in the first quarter of 2013 and smashed Wall Street analysts’ consensus of $2.17 a share.

Net income for the first three months of the year was $177 million, or $5.23 per diluted share, compared to net income of $159 million, or $4.49 per diluted share, in the corresponding period of 2013.

The combined ratio of 79.9 percent — which equates to an underwriting profit of more than 20 cents for each premium dollar — represents an improvement on the 85.1 percent reported last year.

Mr Carmilani highlighted record underwriting income — which saw growth of 55.7 percent over last year — which he said drove the company’s combined ratio below 80 percent.

He said: “Allied World is off to a great start in 2014. Premium growth in selected products and record underwriting income drove our combined ratio below 80 percent. Our focus on solid underwriting and investment expertise generated 4.4 percent growth in diluted book value per share.

“We remain well positioned to take advantage of opportunities across the market.”

A loss ratio of 51.9 percent compared to 55.1 percent in the first quarter of 2013. The re/insurer had benefited from a lack of catastrophes and net favourable reserve development of $48.9 million, or 9.2 percentage points, compared to the prior-year period when reserve releases were $44.1 million that took 9.5 percentage points off the loss ratio.

Allied World said diluted book value per share was $107.05, an increase of 4.4 percent from December 31, 2013.

Net investment income grew 42.6 percent compared to the prior-year quarter.

In addition, the company repurchased 670,732 common shares totalling $68.7 million during the first quarter of 2014, and they were approved to launch a new managing agency at Lloyd’s.

The company saw top-line growth across its three main operating segments, including 5.4 percent in US insurance led by growth in excess casualty business and programmes, a 4.6 percent improvement in the company’s expansive international insurance business, driven by new lines of business such as aviation and marine cargo as well as growth across existing lines.

The group’s reinsurance segment grew by 9.8 percent, in part as a result of its participation in Aeolus Re and growth in its crop business.