Allied World Assurance Co. Holdings' CEO Scott Carmilani saysthe company is off to a strong start for 2013 despite first-quarternet income dropping 27 percent.

The Zug, Switzerland-based insurer and reinsurer reportsfirst-quarter net income dropped $59 million to $159 millioneven though gross premiums increased 23 percent to $837 million.Revenues were off 1 percent to $576 million, hurt by net investmentgains dropping 40 percent to $79 million.

The company also reports total expenses were up 15 percent to$412 million.

The company says it suffered no catastrophe losses in the firstquarter, which contributed to a combined ratio of 85.1–basicallyflat compared to the same time in 2012.

During a conference call with financial analysts, Carmilani saysthe company benefited from strong rates of retention, new businessopportunities and the improved rate environment. He says rate forthe carrier's overall insurance portfolio was up 3.5 percent asproperty led the way up more than 6 percent and casualty was up 3percent.

Chief Financial Officer Thomas Bradley says an increase incompensation expense due to depreciation of its stock price andhigher acquisition costs in the reinsurance segment for newretrocession coverage plus higher profit commissions on certainaccounts contributed to the increase in expenses.