Swiss (re)insurer Allied World has recorded a $US68.6 million ($89.3 million) net profit for the third quarter, compared with a net loss of $US51.6 million ($67.1 million) in the corresponding period last year.

CFO Tom Bradley attributes the result to $US61.2 million ($79.68 million) in investment returns and $US29.7 ($38.65 million) of net favourable loss development on prior-year reserves.

Net investment income grew 10.7% to $US50.6 million ($65.9 million) in the quarter on contributions from the fixed-income portfolio and higher returns from the hedge fund and private equity portfolios.

Allied World’s combined operating ratio deteriorated to 96.2% from 95.8% in the corresponding period last year.

Gross written premium decreased 3.2% to $US730.2 million ($950.70 million).

North American GWP grew 1.3% to $US466.5 million ($607.33 million), led by increases in programs and other specialty lines, partially offset by reductions in healthcare and property.

Global markets insurance GWP decreased 4.5% to $US126.7 million ($164.94 million), dragged down by falls in several lines across Europe and Asia.

While there were no new reportable catastrophe losses in the quarter – compared with $US35.5 million ($46.2 million) in the corresponding period last year – catastrophe losses increased $US4.9 million ($6.37 million) due to the Texas hailstorms of the second quarter.

Reinsurance segment GWP decreased 14.9% to $US137 million ($178.46 million), amid strategic non-renewal of several property and casualty treaties.