Obligation Allied Globe Assurance Holdings Ltd 4.35% ( US01959EAC21 ) en USD

Allied Globe Assurance Holdings Ltd

99.9 % ⇌

Suisse

US01959EAC21 ( en USD )

4.35% par an ( paiement semestriel )

28/10/2025

Prospectus brochure de l'obligation Allied World Assurance Company Holdings Ltd US01959EAC21 en USD 4.35%, échéance 28/10/2025

01959EAC2

BBB+ ( Qualité moyenne inférieure )

29/10/2025 ( Dans 120 jours )

Allied World Assurance Company Holdings Ltd. était une société d'assurance mondiale offrant une gamme de produits et de services d'assurance et de réassurance aux particuliers et aux entreprises, avant son acquisition par Fairfax Financial Holdings en 2017.

L'Obligation émise par Allied Globe Assurance Holdings Ltd ( Suisse ) , en USD, avec le code ISIN US01959EAC21, paye un coupon de 4.35% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 28/10/2025
L'Obligation émise par Allied Globe Assurance Holdings Ltd ( Suisse ) , en USD, avec le code ISIN US01959EAC21, a été notée BBB+ ( Qualité moyenne inférieure ) par l'agence de notation Standard & Poor's ( S&P ).

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TABLE OF CONTENTS
TABLE OF CONTENTS 2
Table of Contents
CALCULATION OF REGISTRATION FEE

Proposed maximum
Proposed maximum
Title of each class of securities
Amount to be
offering price per
aggregate offering
Amount of
to be registered

Registered

unit

price

registration fee(1)

4.35% Senior Notes due 2025

$500,000,000

99.952%

$499,760,000

$50,325.83

Guarantee of 4.35% Senior Notes
due 2025

--

--

--

$0.00(2)

(1)
Calculated in accordance with Rule 457(r) under the Securities Act of 1933, as amended.
(2)
Pursuant to Rule 457(n), no separate registration fee is payable with regard to the guarantees.
Table of Contents
Filed pursuant to Rule 424(b)(5)
Registration Statement No. 333-205082
P R O S P E C T U S S U P P L E M E N T
(To prospectus dated June 19, 2015)
$500,000,000
Allied World Assurance Company Holdings, Ltd
4.35% Senior Notes due 2025
Fully and Unconditionally Guaranteed by
Allied World Assurance Company Holdings, AG
Allied World Assurance Company Holdings, Ltd is offering $500 million aggregate principal amount of 4.35% senior notes due 2025. Allied
World Assurance Company Holdings, Ltd will pay interest on the notes on April 29 and October 29 of each year, beginning April 29, 2016. The 4.35%
senior notes due 2025 will mature on October 29, 2025. Allied World Assurance Company Holdings, Ltd may redeem some or all of the notes at any
time and from time to time at the applicable redemption prices described in this prospectus supplement under the heading "Description of Notes and
Guarantee--Optional Redemption." Allied World Assurance Company Holdings, Ltd may also redeem all of the notes if certain tax events occur as
described in this prospectus supplement under the heading "Description of Notes and Guarantee--Redemption for Changes in Withholding Taxes." The
notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Allied World Assurance Company Holdings, Ltd is a Bermuda company and is a direct wholly-owned subsidiary of Allied World Assurance
Company Holdings, AG, a Swiss company and the ultimate holding company. The notes will be direct unsecured and unsubordinated obligations of
Allied World Assurance Company Holdings, Ltd and will rank equally in right of payment with all of Allied World Assurance Company
Holdings, Ltd's existing and future unsecured and unsubordinated indebtedness. The notes will be effectively junior to all of Allied World Assurance
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Company Holdings, Ltd's future secured debt, to the extent of the value of the collateral securing such debt, and will rank senior to all of Allied World
Assurance Company Holdings, Ltd's existing and future subordinated debt. The notes will be effectively subordinated to all existing and future
obligations (including to policyholders, trade creditors, debt holders and taxing authorities) of Allied World Assurance Company Holdings, Ltd's
subsidiaries. Allied World Assurance Company Holdings, AG will fully and unconditionally guarantee the notes on a senior unsecured basis.
Investing in the notes involves risks. See "Risk Factors" beginning on page S-6 of this prospectus supplement and in the documents
incorporated by reference in this prospectus supplement and the accompanying prospectus.

Per Note

Total

Public offering price(1)

99.952%

$499,760,000

Underwriting discount

0.650%

$3,250,000

Proceeds, before expenses, to us(1)

99.302%

$496,510,000

(1)
Plus accrued interest, if any, from October 29, 2015, if settlement occurs after that date.
None of the U.S. Securities and Exchange Commission (the "Commission"), any state securities commission or any other regulatory body
has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company ("DTC") and its participants,
which may include Clearstream Banking, societé anonymé and Euroclear Bank S.A./N.V., against payment in New York, New York on or about
October 29, 2015.
Joint Book-Running Managers
Barclays

Credit Suisse
Citigroup

Wells Fargo Securities
Co-Managers
BMO Capital Markets

ING

The date of this prospectus supplement is October 26, 2015.
Table of Contents
You should carefully read this prospectus supplement and the accompanying prospectus delivered with this prospectus supplement. You
should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus or
in any free writing prospectus that we may provide you in connection with the sale of the notes offered hereby. We have not, and the
underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should not assume that the information contained in this prospectus supplement, the
accompanying prospectus or the documents incorporated by reference is accurate as of any date other than their respective dates. Our
business, financial conditions, results of operations and prospects may have changed since those dates.
No offered securities may be offered or sold in Bermuda and offers may only be accepted from persons resident in Bermuda, for Bermuda
exchange control purposes, where such offers have been delivered outside of Bermuda.
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GENERAL PERMISSION UNDER THE BERMUDA EXCHANGE CONTROL ACT 1972 (AND ITS RELATED REGULATIONS) HAS BEEN
GRANTED BY THE BERMUDA MONETARY AUTHORITY PURSUANT TO A NOTICE TO THE PUBLIC ISSUED BY THE BERMUDA
MONETARY AUTHORITY ON 1 JUNE 2005 FOR THE ISSUE AND TRANSFER OF OUR NOTES TO AND BETWEEN NON-RESIDENTS OF
BERMUDA FOR EXCHANGE CONTROL PURPOSES. IN GIVING SUCH CONSENT THE BERMUDA MONETARY AUTHORITY DOES NOT
ACCEPT ANY RESPONSIBILITY FOR OUR FINANCIAL SOUNDNESS OR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE
OR OPINIONS EXPRESSED IN THIS PROSPECTUS.
In this prospectus supplement, references to "Allied World", "Allied World Switzerland", "we", "us", "our" or the "Company" refer to Allied World
Assurance Company Holdings, AG and, when the context so requires, Allied World Assurance Company Holdings, AG and its subsidiaries. In this
prospectus supplement, references to "Allied World Bermuda" or the "Issuer" refer to Allied World Assurance Company Holdings, Ltd and, when the
context so requires, Allied World Assurance Company Holdings, Ltd and its subsidiaries. In this prospectus supplement, references to "dollar" and "$"
are to United States currency and references to "CHF" are to Swiss francs.
S-i
Table of Contents
TABLE OF CONTENTS

Page

Prospectus Supplement

About This Prospectus Supplement
S-iii
Disclosure Regarding Forward-Looking Statements
S-iii
Prospectus Supplement Summary
S-1
Risk Factors
S-6
Use of Proceeds
S-12
Ratios of Earnings to Fixed Charges
S-12
Capitalization
S-13
Description of Notes and Guarantee
S-14
Certain United States Federal Income Tax Considerations
S-24
Underwriting
S-26
Legal Matters
S-31
Experts
S-31
Where You Can Find More Information
S-31

Prospectus
About This Prospectus

1
About Allied World Assurance Company Holdings, AG

2
About Allied World Assurance Company Holdings, Ltd

3
General Description of the Offered Securities

4
Ratio of Earnings to Fixed Charges

5
Cautionary Statement Regarding Forward-Looking Statements

6
Use of Proceeds

7
Description of Allied World Switzerland Shares

8
Description of the Debt Securities

20
Certain Provisions Applicable to Subordinated Debt Securities

34
Information Concerning the Trustee

35
Description of the Debt Securities Guarantees

36
Description of the Warrants to Purchase Common Shares

37
Description of the Warrants to Purchase Debt Securities

39
Description of Units

41
Plan of Distribution

42
Where You Can Find More Information

45
Incorporation of Certain Documents by Reference

45
Legal Opinions

46
Experts

46
Enforcement of Civil Liabilities Under United States Federal Securities Laws

46
S-ii
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Table of Contents
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first is this prospectus supplement, which describes the specific terms of this offering. The second part is the
accompanying prospectus that gives more general information, some of which may not apply to this offering. If the description of this offering varies
between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement. In addition,
you should review the risks of investing in the Notes (as defined below) discussed in this prospectus supplement, as well as the risk factors contained in
our Annual Report on Form 10-K for the year ended December 31, 2014 incorporated herein by reference, prior to making an investment decision.
Important information is incorporated into this prospectus supplement and the accompanying prospectus by reference. You may obtain the information
incorporated by reference into this prospectus supplement and the accompanying prospectus without charge by following the instructions under "Where
You Can Find More Information."
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, including the information incorporated by reference herein, may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-
looking statements made by, or on behalf of, us.
In particular, statements using words such as "may", "should", "estimate", "expect", "anticipate", "intends", "believe", "predict", "potential" or
words of similar import generally involve forward-looking statements. In light of the risks and uncertainties inherent in all future projections, the
inclusion of forward-looking statements in this prospectus supplement should not be considered as a representation by us or any other person that our
objectives or plans will be achieved. Numerous factors could cause our actual results to differ materially from those addressed by the forward-looking
statements, including those contained under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, which is
incorporated herein by reference.
S-iii
Table of Contents
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information about Allied World and this offering. It does not contain all of the information that may be important
to you in deciding whether to purchase Notes. We encourage you to read the entire prospectus supplement, the accompanying prospectus and the
documents that we have filed with the Commission that are incorporated by reference prior to deciding whether to purchase Notes.
Allied World Assurance Company Holdings, AG
Allied World, the guarantor of the 4.35% Senior Notes due 2025 (the "Notes"), is a Swiss-based holding company headquartered in Zug,
Switzerland, whose subsidiaries provide innovative property, casualty and specialty insurance and reinsurance solutions to clients worldwide. We were
formed in Bermuda in 2001 and have continued to maintain significant insurance and reinsurance operations there following our redomestication to
Switzerland in 2010.
We manage our business through three operating segments: North American Insurance, Global Markets Insurance and Reinsurance. Our North
American Insurance segment is comprised of our direct insurance operations in the United States, Bermuda and Canada. Within this segment we
provide a diverse range of specialty liability products, including coverages for healthcare, professional liability risks and construction. Additionally, we
offer a selection of direct casualty insurance and property insurance products. Our Bermuda operations underwrite primarily larger, Fortune 1000
casualty and property risks for accounts domiciled in North America, while our operations in the United States and Canada generally write small- and
middle-market, non-Fortune 1000 accounts domiciled in North America, including public entities, private companies and non-profit organizations.
Our Global Markets Insurance segment includes all of our direct insurance business outside of North America. We operate primarily in Europe and
Asia and have an office in Miami that underwrites Latin American risks. While our European offices have historically focused on mid-sized to large
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European and multi-national companies domiciled outside of North America, we continue to expand our product offerings for small- and middle-
market accounts and for specialist classes of business with global exposures. This segment underwrites a variety of professional liability, casualty,
healthcare liability, retail, property, marine, on-shore construction, motor, accident and health products. In addition, our Lloyd's Syndicate 2232 writes
international property, casualty, professional liability, marine and aviation targeted either at key territories or where our customers have requested a
Lloyd's policy.
Our Reinsurance segment includes the reinsurance of property, casualty, professional liability, specialty lines and property catastrophe coverages
written by other insurance companies. We write reinsurance on both a treaty and a facultative basis targeting several niche markets including
professional liability lines, specialty casualty, property for U.S. regional insurers, accident and health, marine, aerospace and crop risks.
The following table sets forth our gross premiums written by segment for the nine months ended September 30, 2015 and the year ended
December 31, 2014.
Nine Months Ended
Year Ended
September 30, 2015
December 31, 2014

Gross Premiums Written

Gross Premiums Written

($ in millions)
% of Total

($ in millions)
% of Total

North American Insurance
$
1,358.6
55.3% $
1,716.3
58.4%
Global Markets Insurance

328.2
13.3

280.5
9.6
Reinsurance

773.8
31.4

938.6
32.0
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Total
$
2,460.6
100.0% $
2,935.4
100.0%
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
S-1
Table of Contents
Ratings are an important factor in establishing the competitive position of insurance and reinsurance companies. A.M. Best, Moody's and
Standard & Poor's have each developed a rating system to provide an opinion of an insurer's or reinsurer's financial strength and ability to meet ongoing
obligations to its policyholders. Each rating reflects the rating agency's opinion of the capitalization, management and sponsorship of the entity to which
it relates, and is neither an evaluation directed to investors in our securities nor a recommendation to buy, sell or hold our securities. All of our
principal operating subsidiaries have financial strength ratings of "A" (Excellent) from A.M. Best, "A" (Strong) from Standard & Poor's, and "A2"
(Good) by Moody's.
Allied World Switzerland is a Swiss corporation with its principal executive office located at Gubelstrasse 24, Park Tower, 15th Floor, 6300 Zug,
Switzerland. Our telephone number at that address is +41-41-768-1080.
Allied World Assurance Company Holdings, Ltd
Allied World Bermuda, the issuer of the Notes, is a direct, wholly-owned subsidiary of Allied World Switzerland. Allied World Bermuda is the
issuer of Allied World's outstanding 5.50% Senior Notes due November 15, 2020 and 7.50% Senior Notes due August 1, 2016 (together, the "Pre-
Existing Senior Notes").
Allied World Bermuda's principal executive offices are located at 27 Richmond Road, Pembroke, HM 08, Bermuda. Our telephone number at that
address is (441) 278-5400.
S-2
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The Offering
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The terms of the Notes and the full and unconditional guarantee thereof by Allied World Switzerland (the "Guarantee") are summarized below
solely for your convenience. Because the following summary is not complete, you should refer to the indenture among Allied World Bermuda, as issuer,
Allied World Switzerland, as guarantor, and The Bank of New York Mellon, as trustee, as supplemented by a supplemental indenture relating to the
Notes, for a complete description of the terms of the Notes, and the senior debt securities guarantee agreement relating to the Notes, between Allied
World Switzerland, as guarantor, and The Bank of New York Mellon, as guarantee trustee, for a complete description of the terms of the Guarantee.
You should also read the full text and more specific details contained elsewhere in this prospectus supplement and the accompanying prospectus. For a
more detailed description of the Notes and the Guarantee, see the discussion under the caption "Description of Notes and Guarantee" beginning on
page S-14 of this prospectus supplement.
Issuer

Allied World Assurance Company Holdings, Ltd

Guarantor
Allied World Assurance Company Holdings, AG

Securities Offered
$500 million aggregate principal amount of 4.35% senior
notes due 2025.

Interest Rate
4.35% per year.

Interest Payment Dates
Semi-annually on each April 29 and October 29,
commencing April 29, 2016.

Maturity
October 29, 2025.

Ranking
The Notes will be direct unsecured and unsubordinated
obligations of Allied World Bermuda and will rank
equally in right of payment with all of Allied World
Bermuda's existing and future unsecured and
unsubordinated indebtedness including the Pre-Existing
Senior Notes. The Notes will be effectively junior to all
of Allied World Bermuda's future secured debt, to the
extent of the value of the collateral securing such debt,
and will rank senior to all of Allied World Bermuda's
existing and future subordinated debt.

The Guarantee will be a direct unsecured and
unsubordinated obligation of Allied World Switzerland
and will rank equally in right of payment with all of
Allied World Switzerland's existing and future unsecured
and unsubordinated indebtedness including Allied World
Switzerland's liability of its guarantees of the Pre-Existing
Senior Notes. The Guarantee will be effectively junior to
all of Allied World Switzerland's future secured
obligations, to the extent of the value of the collateral
securing such obligations, and will rank senior to all of
Allied World Switzerland's existing and future
subordinated obligations.
S-3
Table of Contents

We currently conduct substantially all of our operations
through our subsidiaries and our subsidiaries generate
substantially all of our operating income and cash flow.
Neither the Notes nor the Guarantee will be guaranteed by
any of our subsidiaries and will be effectively
subordinated to all existing and future obligations
(including to policyholders, trade creditors, debt holders
and taxing authorities) of our subsidiaries.
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On an unconsolidated basis, Allied World Switzerland did
not have any indebtedness for borrowed money as of
September 30, 2015. As of September 30, 2015, after
giving effect to this offering of Notes, our outstanding
consolidated indebtedness for money borrowed would be
$1,322 million. As of September 30, 2015, after giving
effect to this offering of Notes, the consolidated liabilities
of our subsidiaries reflected on our balance sheet would
be $10,142 million. All such liabilities (including to
policyholders, trade creditors, debt holders and taxing
authorities) of our subsidiaries (other than Allied World
Bermuda) would be effectively senior to the Notes.

Optional Redemption
We may redeem some or all of the Notes at any time at
our option on not less than 30 nor more than 60 days'
notice, at the applicable redemption prices described in
"Description of Notes and Guarantee--Optional
Redemption" in this prospectus supplement.

Use of Proceeds
We intend to use the net proceeds from this offering for
the repayment, upon maturity, of Allied World Bermuda's
outstanding $500 million aggregate principal amount of
7.50% senior notes due August 1, 2016, as well as for
general corporate purposes (exclusively outside of
Switzerland), which may include the repurchase of our
outstanding common shares, dividends to our
shareholders or potential acquisitions. See "Use of
Proceeds" in this prospectus supplement.

Additional Amounts
Subject to certain limitations and exceptions, all payments
of principal and of premium, if any, interest and any other
amounts on, or in respect of, the Notes shall be made
without withholding or deduction at source for, or on
account of, any present or future taxes, fees, duties,
assessments or governmental charges of whatever nature
with respect to payments made by Allied World Bermuda
imposed by or on behalf of Bermuda or any other
jurisdiction in which Allied World Bermuda or the
guarantor of the Notes is organized or in which our
principal executive offices are located. See "Description
of Notes and Guarantee--Payment of Additional
Amounts."

Tax Redemption
We may redeem all of the Notes at any time if certain tax
events occur as described in "Description of Notes and
Guarantee--Redemption for Changes in Withholding
Taxes."
S-4
Table of Contents
Form and Denomination

The Notes will be represented by global certificates
deposited with, or on behalf of, The Depository Trust
Company ("DTC") or its nominee. The Notes sold will be
issuable in denominations of $2,000 or any integral
multiples of $1,000 in excess thereof.

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Covenants
The indenture under which the Notes will be issued, as
supplemented by the supplemental indenture, will not
contain any financial covenants or any provisions
restricting us or our subsidiaries from purchasing or
redeeming share capital. In addition, we will not be
required to repurchase, redeem or modify the terms of any
of the Notes upon a change of control or other event
involving us, which may adversely affect the value of the
Notes. In addition, the indenture, as supplemented by the
supplemental indenture, will not limit the aggregate
principal amount of debt securities we may issue under it,
and we may issue additional debt securities in one or
more series, including issuing additional Notes at later
dates under the same supplemental indenture relating to
the Notes, subject to compliance with the terms of the
supplemental indenture and the indenture.

Risk Factors
Investing in the Notes involves certain risks. See "Risk
Factors" beginning on page S-6 of this prospectus
supplement.

Trustee, Guarantee Trustee and Paying Agent
The Bank of New York Mellon.

Governing Law and Consent to Jurisdiction
The Indenture (as defined below), Notes and Guarantee
will be governed by the laws of the State of New York.
We and the holders agree that any judicial proceedings in
relation to any matter arising under the Indenture, Notes
or Guarantee may be brought in any United States Federal
or New York State court sitting in the Borough of
Manhattan, The City of New York, New York to the
extent that such court has subject matter jurisdiction over
the controversy.
S-5
Table of Contents
RISK FACTORS
Your investment in the Notes will involve a degree of risk, including those risks that are described in this section. The risks and uncertainties
described below are not the only ones relevant to an investment in the Notes. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations. If any of these risks actually occur, our business, financial condition and results of
operations could be materially affected. In that case, the value of the Notes could decline substantially. You should carefully consider the following
discussion of risks as well as the risks in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014,
which is incorporated into this prospectus supplement by reference, before deciding whether an investment in the Notes is suitable for you.
Risks Relating to the Notes
An Active Trading Market for the Notes may not Develop.
The Notes constitute a new issue of securities with no established trading market. The Notes are not listed, and we do not plan to apply to list the
Notes on any national securities exchange or to include them in any automated quotation system. We have been advised by the underwriters that they
presently intend to make a market in the Notes after completion of the offering. However, they are under no obligation to do so and may discontinue any
market-making activities at any time without any notice. We cannot assure the liquidity of the trading market for the Notes or that an active public
market for the Notes will develop or be sustained or that holders of the Notes will be able to sell their Notes at favorable prices or at all. If an active
public trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected. If the Notes are traded, they
may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our operating
performance and financial condition, general economic conditions and other factors.
Our Obligations Under the Notes and the Guarantee are Unsecured and Subordinated in Right of Payment to any Secured Debt that We may Incur
in the Future.
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The Notes will be direct unsecured and unsubordinated obligations of Allied World Bermuda and will:
·
rank equally in right of payment with all of Allied World Bermuda's existing and future unsecured and unsubordinated indebtedness
including the Pre-Existing Senior Notes;
·
be effectively junior to all of Allied World Bermuda's future secured debt, to the extent of the value of the collateral securing such debt;
and
·
not be guaranteed by any of our subsidiaries and, therefore, will be effectively subordinated to all existing and future obligations
(including to policyholders, trade creditors, debt holders and taxing authorities) of our subsidiaries.
The Guarantee will be a direct unsecured and unsubordinated obligation of Allied World Switzerland and will:
·
rank equally in right of payment with all of Allied World Switzerland's existing and future unsecured and unsubordinated indebtedness
including Allied World Switzerland's liability of its guarantees of the Pre-Existing Senior Notes;
·
be effectively junior to all of Allied World Switzerland's future secured obligations, to the extent of the value of the collateral securing
such obligations; and
S-6
Table of Contents
·
not be guaranteed by any of our subsidiaries and, therefore, will be effectively subordinated to all existing and future obligations
(including to policyholders, trade creditors, debt holders and taxing authorities) of our subsidiaries (other than Allied World Bermuda).
As a result, in the event of the bankruptcy, liquidation or reorganization of Allied World Bermuda or Allied World Switzerland or upon
acceleration of the Notes or the Guarantee due to an event of default, Allied World Bermuda's or Allied World Switzerland's assets will be available to
pay its obligations on the Notes or the Guarantee, as applicable, only after all secured indebtedness and other obligations have been paid in full. There
may not be sufficient assets remaining to pay amounts due on any or all of the Notes or on the Guarantee then outstanding.
Because the Notes and the Guarantee will not be Guaranteed by any of Our Subsidiaries, the Notes and the Guarantee will be Effectively
Subordinated to the Obligations of Our Subsidiaries.
We are a holding company whose assets primarily consist of the shares in our subsidiaries and we conduct substantially all of our business through
our subsidiaries. Because our subsidiaries are not guaranteeing Allied World Bermuda's or Allied World Switzerland's obligations under the Notes or
the Guarantee, respectively, holders of the Notes will have a junior position to the claims of creditors of our subsidiaries other than Allied World
Bermuda (including policyholders, trade creditors, debt holders and taxing authorities) on their assets and earnings. All obligations (including insurance
obligations) of our subsidiaries (other than Allied World Bermuda) would be effectively senior to the Notes. As a result, in the event of the bankruptcy,
liquidation or reorganization of Allied World Bermuda or Allied World Switzerland or upon acceleration of the Notes or the Guarantee due to an event
of default, Allied World Bermuda's or Allied World Switzerland's assets will be available to pay its obligations on the Notes or the Guarantee, as
applicable, only after all secured indebtedness and other obligations of our subsidiaries have been paid in full. There may not be sufficient assets
remaining to pay amounts due on any or all of the Notes or on the Guarantee then outstanding. As of September 30, 2015, after giving effect to this
offering of the Notes, the consolidated liabilities of our subsidiaries reflected on our balance sheet would be $10,142 million. All such liabilities
(including to policyholders, trade creditors, debt holders and taxing authorities) of our subsidiaries (other than Allied World Bermuda) would be
effectively senior to the Notes.
Allied World Bermuda will Depend upon Dividends from its Subsidiaries to Meet its Obligations under the Notes and Allied World Switzerland will
Depend upon Dividends from its Subsidiaries to Meet its Obligations as a Guarantor of the Notes.
Allied World Bermuda's ability to meet its obligations under the Notes and Allied World Switzerland's ability to meet its obligations as a guarantor
of the Notes will be dependent upon the earnings and cash flows of their respective subsidiaries and the ability of the subsidiaries to pay dividends or to
advance or repay funds to Allied World Bermuda and Allied World Switzerland, respectively. Dividends and other permitted distributions from our
insurance subsidiaries are expected to be the main source of funds to meet Allied World Bermuda's obligations under the Notes and Allied World
Switzerland's obligations as a guarantor of the Notes. Our insurance subsidiaries are subject to significant regulatory restrictions limiting their ability to
declare and pay any dividends.
The inability of its subsidiaries to pay dividends to Allied World Switzerland in an amount sufficient to enable it to meet its cash requirements at
the holding company level could have a material adverse effect on its operations and on Allied World Bermuda's ability to satisfy its obligations to you
under the Notes and Allied World Switzerland's ability to satisfy its obligations to you under the Guarantee. Dividend payments and other distributions
from the subsidiaries of Allied World Switzerland and Allied World Bermuda may also be subject to withholding tax.
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We may Incur Additional Indebtedness that could Limit the Amount of Funds Available to Make Payments on the Notes.
Neither the Notes, the Guarantee, nor the indenture, as supplemented by the supplemental indenture, prohibit or limit the incurrence of secured or
senior indebtedness or the incurrence of other indebtedness and liabilities by us. Any additional indebtedness or liabilities so incurred by Allied World
Bermuda or Allied World Switzerland would reduce the amount of funds Allied World Bermuda would have available to pay its obligations under the
Notes or Allied World Switzerland would have available to pay its obligations under the Guarantee, respectively.
The Supplemental Indenture and Indenture under which the Notes will be Issued will Contain only Limited Protection for Holders of the Notes in
the Event we are Involved in a Highly Leveraged Transaction, Reorganization, Restructuring, Merger, Amalgamation or Similar Transaction in the
Future.
The indenture and the supplemental indenture under which the Notes will be issued may not sufficiently protect holders of Notes in the event we or
Allied World Bermuda are involved in a highly leveraged transaction, reorganization, restructuring, merger, amalgamation or similar transaction. The
supplemental indenture and the indenture will not contain any provisions restricting our or Allied World Bermuda's ability to:
·
incur additional debt or other obligations, including debt or other obligations effectively senior in right of payment to the Notes;
·
pay dividends on or purchase or redeem share capital;
·
sell assets (other than certain restrictions on our ability to consolidate, merge, amalgamate or sell all or substantially all of our assets and
our ability to sell the shares of certain subsidiaries);
·
enter into transactions with affiliates;
·
create liens (other than certain limitations on creating liens on the shares of certain subsidiaries) or enter into sale and leaseback
transactions; or
·
create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
Additionally, the supplemental indenture and the indenture will not require us or Allied World Bermuda to offer to purchase the Notes in
connection with a change of control or require that we or our subsidiaries, including Allied World Bermuda, adhere to any financial tests or ratios or
specified levels of net worth.
The Notes may be Redeemed Prior to Maturity, which may Adversely Affect your Return on the Notes.
The Notes may be redeemed in whole or in part on one or more occasions at any time. Redemption may occur at a time when prevailing interest
rates are relatively low. If this happens, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as
high as that of the redeemed Notes. See "Description of Notes and Guarantee--Optional Redemption" in this prospectus supplement for a more detailed
discussion of redemption of the Notes.
U.S. Persons who own Our Notes may have more Difficulty in Protecting their Interests than U.S. Persons who are Creditors of a U.S. Corporation.
Creditors of a company in Bermuda or Switzerland, such as Allied World Bermuda and Allied World Switzerland, respectively, may enforce their
rights against the company by legal process in Bermuda or Switzerland, respectively. The creditor would first have to obtain a judgment in its favor
against Allied World Bermuda or Allied World Switzerland by pursuing a legal action against Allied World Bermuda in Bermuda or Allied World
Switzerland in Switzerland. This would entail retaining
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attorneys in Bermuda or Switzerland, as applicable, and (in the case of a plaintiff who is a U.S. person) pursuing an action in a jurisdiction that would
be foreign to the plaintiff. Pursuing such an action could be more costly than pursuing corresponding proceedings against a U.S. person.
Appeals from decisions of the Supreme Court of Bermuda (the first instance court for most civil proceedings in Bermuda) may be made in certain
cases to the Court of Appeal for Bermuda. In turn, appeals from the decisions of the Court of Appeal may be made in certain cases to the English Privy
Council. Rights of appeal in Bermuda may be more restrictive than rights of appeal in the United States. Similarly, in Switzerland, appeals from
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