ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED, DATED FEBRUARY 8, 2011

Attached files

file	filename
8-K - FORM 8-K - ALTERRA CAPITAL HOLDINGS Ltd	d8k.htm
EX-99.3 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED, DATED FEBRUARY 8, 2011 - ALTERRA CAPITAL HOLDINGS Ltd	dex993.htm
EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT FOR THE QUARTER ENDED DECEMBER 31, 2010. - ALTERRA CAPITAL HOLDINGS Ltd	dex992.htm

Exhibit 99.1

ALTERRA CAPITAL REPORTS FOURTH QUARTER AND YEAR END 2010 RESULTS

Net Operating Income of $2.64 per Diluted Share in 2010

Net Operating ROE of 10.2% in 2010

HAMILTON, BERMUDA, February 8, 2011—Alterra Capital Holdings Limited (NASDAQ: ALTE; BSX: ALTE.BH) (“Alterra”) today reported net income of $79.7 million, or $0.69 per diluted share, for the fourth quarter of 2010, compared to net income of $62.6 million, or $1.08 per diluted share, for the same quarter of 2009. Alterra, formerly known as Max Capital Group Ltd. (“Max”), was formed on May 12, 2010 by the merger of Max and Harbor Point Limited, a privately held company (“Harbor Point”).

Net operating income for the fourth quarter of 2010 was $76.2 million, or $0.66 per diluted share, compared to net operating income of $60.5 million, or $1.04 per diluted share, for the same quarter of 2009. Annualized net operating return on average shareholders’ equity for the fourth quarter of 2010 was 10.2%.

For the year ended December 31, 2010, Alterra reported net income of $302.3 million, or $3.17 per diluted share, compared to net income of $246.2 million, or $4.26 per diluted share, in 2009. Net operating income for the year ended December 31, 2010 was $251.7 million, or $2.64 per diluted share, compared to net operating income of $208.9 million, or $3.62 per diluted share, in 2009. Net operating return on average shareholders’ equity for the year ended December 31, 2010 was 10.2%.

Alterra’s 2010 results include the results of operations for the former Harbor Point companies from May 12, 2010. Comparative figures for 2009 represent the former Max results of operations only. Accordingly, a comparison of Alterra’s gross premiums written and other results of operations for current and prior periods are not meaningful. Selected pro forma combined results of operations for periods prior to the merger for the reinsurance segment are provided in the fourth quarter financial supplement available on Alterra’s website at www.alterracap.com.

W. Marston (Marty) Becker, President and Chief Executive Officer of Alterra, said: “It has been an exciting and profitable year for Alterra and our shareholders. Our success continues to be tied to our strategy of opportunistically entering complementary market segments with attractive underwriting prospects, while consistently deploying “best in class” underwriting talent to build profitable books of business and better serve our clients.”

Mr. Becker added: “In 2010, the insurance markets continued to be impacted by competitive pricing that became increasingly more aggressive as the year progressed. In this environment, our foremost objective was, and is, to maintain our underwriting discipline, and we believe we have done this well to date. As evidence of this, we expect losses from the recent events in Australia and Egypt to be within our normal ranges.”

“With declining premiums but continuing profitability, excess capital is inevitably generated. We are committed to the flexible and efficient management of capital, and accordingly we are pleased to have returned over $558 million to our shareholders in 2010, in the form of regular dividends, a special dividend, and share repurchases.”

“We are well positioned to navigate the uncertainty of the present industry environment, and to capture meaningful opportunity at the cycle inflection point. In the interim, we intend to continue to focus on growth in book value per share, capital management and a competitive dividend, and to protect our clean and strong balance sheet,” Mr. Becker concluded.

Fourth quarter 2010 results for Alterra include:

•

Property and casualty gross premiums written of $313.5 million, representing an increase of $37.1 million, or 13.4%; net premiums written of $236.0 million, representing an increase of $62.6 million, or 36.1%; and net premiums earned of $340.8 million, representing an increase of $135.3 million, or 65.8%; each as compared to the same quarter of 2009. The percentage increases in these figures primarily reflect incremental growth from recent expansion initiatives,

including the merger with Harbor Point - whose premiums are not included in the comparative 2009 results of operations - as well as from new operations in Latin America and new product offerings at Alterra at Lloyd’s. These increases were partially offset by decreases in previously existing operations where writings were reduced due to unattractive returns;

•

A combined ratio on property and casualty business of 84.8% compared to 81.2% in the same quarter of 2009;

•

Property catastrophe event and significant per-risk net losses of $13.0 million compared to no material property catastrophe losses in the same quarter of 2009;

•

Net favorable development on prior years’ loss reserves of $28.0 million, or 8.3 combined ratio points, compared to $30.9 million, or 15.0 combined ratio points, in the same quarter of 2009;

•

Net investment income of $61.1 million compared to $44.7 million in the same quarter of 2009, an increase of 36.7%;

•

Increased general and administrative expenses principally due to a shift in the allocation of performance based compensation from equity to cash awards; and

•

Net operating income of $76.2 million, or $0.66 per diluted share, representing an annualized net operating return on average shareholders’ equity of 10.2%.

Gross premiums written from property and casualty underwriting for the fourth quarter of 2010 were $313.5 million, generated by the segments as follows: insurance - $101.1 million, a decrease of $23.9 million, or 19.1%; reinsurance - $110.6 million, an increase of $43.9 million, or 65.8%; U.S. specialty - $77.7 million, an increase of $11.5 million, or 17.4%; and Alterra at Lloyd’s - $24.0 million, an increase of $5.6 million, or 30.7%. Gross premiums written included $4.8 million from our operations in Latin America, which started in the first quarter of 2010.

Combined ratios for the fourth quarter of 2010 by segment were 76.0% for insurance, 82.8% for reinsurance, 100.2% for U.S. specialty and 86.4% for Alterra at Lloyd’s.

Results for the year ended December 31, 2010 include:

•

Property and casualty gross premiums written of $1,405.8 million, representing an increase of $74.6 million, or 5.6%; net premiums written of $1,035.0 million, representing an increase of $183.9 million, or 21.6%; and net premiums earned of $1,168.0 million, representing an increase of $376.9 million, or 47.7%; each as compared to 2009. The percentage increases in these figures primarily reflect incremental growth from recent expansion initiatives, including the merger with Harbor Point - whose premiums are not included in the comparative 2009 results of operations - as well as from new operations in Latin America and new product offerings at Alterra at Lloyd’s. These increases were partially offset by decreases in previously existing operations where writings were reduced due to unattractive returns;

•

A combined ratio on property and casualty business of 85.7% compared to 88.1% in 2009;

•

Property catastrophe event and significant per-risk losses of $54.9 million compared to $10.4 million in 2009;

•

Net favorable development on prior years’ loss reserves of $105.5 million, or 9.0 combined ratio points, compared to $78.3 million, or 9.9 combined ratio points, in 2009;

•

Net investment income of $222.5 million compared to $169.7 million in 2009, an increase of 31.1%; and

•

Net operating income of $251.7 million, or $2.64 per diluted share, representing a net operating return on average shareholders’ equity of 10.2%.

Gross premiums written from property and casualty underwriting for the year ended December 31, 2010 were $1,405.8 million, generated by the segments as follows: insurance - $370.1 million, a decrease of $57.6 million, or 13.5%; reinsurance - $509.1 million, an increase of $20.0 million, or 4.1%; U.S. specialty - $324.0 million, an increase of $38.5 million, or 13.5%; and Alterra at Lloyd’s - $202.6 million, an increase of $73.7 million, or 57.1%. There were no new contracts written within the life and annuity segment during the year ended December 31, 2010.

Combined ratios for the year ended December 31, 2010 by segment were 73.6% for insurance, 86.8% for reinsurance, 97.9% for U.S. specialty and 83.4% for Alterra at Lloyd’s.

Balance Sheet

Total invested assets, including cash and cash equivalents, were $7.9 billion at December 31, 2010, an increase of $2.6 billion from December 31, 2009. The increase in total invested assets primarily reflects additional invested assets from the Harbor Point investment portfolio. As of December 31, 2010, 96.0% of the fixed maturities portfolio (by carrying value) was investment-grade, a decrease of 0.6 percentage points from December 31, 2009. As of December 31, 2010, the weighted average book yield of Alterra’s cash and fixed maturities portfolio was 3.22% and the weighted average duration was 4.2 years.

Net investment income for the fourth quarter of 2010 increased to $61.1 million from $44.7 million for the same quarter of 2009, and to $222.5 million from $169.7 million for the years ended December 31, 2010 and 2009, respectively. The increase in net investment income reflects the additional investment income from the Harbor Point investment portfolio since the consummation of the merger, and an increased allocation to higher-yielding fixed maturity securities.

Under the Board-approved share repurchase authorization, Alterra repurchased 5,236,085 of its common shares during the fourth quarter of 2010 at an average price of $20.88 per share for a total of $109.3 million. Share repurchases for the year ended December 31, 2010 were 10,288,434 common shares at an average price of $20.19 per share for a total of $207.8 million. As of December 31, 2010, $127.8 million remained under the Board-approved share repurchase authorization.

Shareholders’ equity was $2,918.3 million as of December 31, 2010, an increase of 86.5% from December 31, 2009, reflecting the impact of the merger. Diluted book value per share as of December 31, 2010 was $25.99, an increase of 5.7% from December 31, 2009 after adding back $2.94 per share in dividends paid to shareholders during the year.

A copy of Alterra’s financial supplement for the fourth quarter will be available on Alterra’s website at www.alterracap.com shortly after the release of earnings.

Alterra will host a conference call on Wednesday, February 9, 2011 at 10:00 am (ET) to discuss these results with interested investors and shareholders. The conference call can be accessed via telephone by dialing 1-888-713-4215 (toll-free U.S.) or 1-617-213-4867 (international) and using access code 76980192. A live broadcast of the conference call will also be available through Alterra’s website at www.alterracap.com.

Alterra Capital Holdings Limited is a global enterprise dedicated to providing diversified specialty insurance and reinsurance products to corporations, public entities and property and casualty insurers.

Non-GAAP Financial Measures

In presenting Alterra’s results, management has included and discussed net operating income, net operating income per diluted share, net operating return on average shareholders’ equity and diluted tangible book value per share. These measures are “non-GAAP financial measures” as defined in Regulation G. Management believes that these non-GAAP financial measures, which may be defined differently by other companies, allow for a more complete understanding of Alterra’s business. These measures, however, should not be viewed as a substitute for those measures determined in accordance with U.S. GAAP. The reconciliation of these measures to their respective most directly comparable U.S. GAAP financial measures is presented in the attached financial information in accordance with Regulation G.

Cautionary Note Regarding Forward-Looking Statements

This release may include forward-looking statements that reflect Alterra’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those suggested by such statements. For further information regarding cautionary statements and factors affecting Alterra’s future results, please refer to the most recent reports on Form 10-K and Form 10-Q and other documents filed by Alterra with the SEC. Alterra undertakes no obligation to update or revise publicly any forward-looking statement whether as a result of new information, future developments or otherwise.

Contacts

Susan Spivak Bernstein

Senior Vice President

susan.spivak@alterra-bm.com

1-212-898-6640

Roanne Kulakoff or Peter Hill

Kekst and Company

roanne-kulakoff@kekst.com

peter-hill@kekst.com

1-212-521-4800

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of United States Dollars, except per share and share amounts)


	December 31, 2010		December 31, 2009
	(unaudited)
ASSETS
Cash and cash equivalents	$	905,606	$	702,278
Fixed maturities, trading at fair value		244,872		228,696
Fixed maturities, available for sale at fair value		5,392,643		3,007,356
Fixed maturities, held to maturity at amortized cost (fair value $1,015,512)		940,104		1,005,947
Other investments, at fair value		378,128		318,073
Accrued interest income		75,414		57,215
Premiums receivable		588,537		567,301
Losses and benefits recoverable from reinsurers		956,115		1,001,373
Deferred acquisition costs		111,901		65,648
Prepaid reinsurance premiums		149,252		190,613
Trades pending settlement		32,393		76,031
Goodwill and intangible assets		59,076		48,686
Other assets		83,247		70,529

Total assets	$	9,917,288	$	7,339,746


LIABILITIES
Property and casualty losses	$	3,906,134	$	3,178,094
Life and annuity benefits		1,275,580		1,372,513
Deposit liabilities		147,612		152,629
Funds withheld from reinsurers		121,107		140,079
Unearned property and casualty premiums		905,487		628,161
Reinsurance balances payable		102,942		146,085
Accounts payable and accrued expenses		99,680		67,088
Senior notes		440,476		90,464

Total liabilities		6,999,018		5,775,113


SHAREHOLDERS’ EQUITY
Preferred shares (par value $1.00) 20,000,000 shares authorized; no shares issued or outstanding		—		—
Common shares (par value $1.00) 200,000,000 shares authorized; 110,963,160 (2009 - 55,867,125) shares issued and outstanding		110,963		55,867
Additional paid-in capital		2,026,045		752,309
Accumulated other comprehensive income		98,946		25,431
Retained earnings		682,316		731,026

Total shareholders’ equity		2,918,270		1,564,633


Total liabilities and shareholders’ equity	$	9,917,288	$	7,339,746


Book value per share	$	26.30	$	28.01


Diluted book value per share	$	25.99	$	27.36


Diluted tangible book value per share [a]	$	25.46	$	26.51


Diluted shares outstanding		112,290,968		57,178,458

[a]	Non-Gaap measure as defined by Regulation G.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

(Expressed in thousands of United States Dollars, except per share and share amounts)


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009
REVENUES
Gross premiums written	$	315,398		$	278,333		$	1,410,731		$	1,375,001
Reinsurance premiums ceded		(77,617	)		(103,143	)		(371,163	)		(480,481	)

Net premiums written	$	237,781		$	175,190		$	1,039,568		$	894,520


Earned premiums	$	445,683		$	325,078		$	1,578,647		$	1,318,949
Earned premiums ceded		(103,129	)		(117,805	)		(406,161	)		(484,593	)

Net premiums earned		342,554			207,273			1,172,486			834,356

Net investment income		61,080			44,668			222,458			169,741
Net realized and unrealized gains on investments		9,825			17,325			16,872			81,765

Total other-than-temporary impairment losses		(3,918	)		(125	)		(5,873	)		(5,315	)
Portion of loss recognized in other comprehensive income (loss), before taxes		2,144			(800	)		3,228			2,237

Net impairment losses recognized in earnings		(1,774	)		(925	)		(2,645	)		(3,078	)

Net realized gain on retirement of senior notes		—			111			—			111
Other income		2,862			(196	)		4,808			2,903

Total revenues		414,547			268,256			1,413,979			1,085,798


LOSSES AND EXPENSES
Net losses and loss expenses		179,047			114,870			654,841			493,599
Claims and policy benefits		18,551			16,976			65,213			101,093
Acquisition costs		53,563			23,188			187,464			96,874
Interest expense		7,866			6,685			28,275			21,339
Net foreign exchange (gains) losses		(382	)		702			(115	)		(5,772	)
Merger and acquisition expenses		500			(224	)		(48,776	)		(31,566	)
General and administrative expenses		76,759			38,458			220,586			153,995

Total losses and expenses		335,904			200,655			1,107,488			829,562


INCOME BEFORE TAXES		78,643			67,601			306,491			256,236

Income tax (benefit) expense		(1,027	)		5,009			4,156			10,021


NET INCOME [a]		79,670			62,592			302,335			246,215

Change in net unrealized gains and losses on fixed maturities, net of tax		(87,633	)		(16,085	)		81,406			50,544
Foreign currency translation adjustment		(3,746	)		(86	)		(7,891	)		20,286

COMPREHENSIVE (LOSS) INCOME [a]	$	(11,709	)	$	46,421		$	375,850		$	317,045


Basic earnings per share	$	0.70		$	1.10		$	3.19		$	4.32

Diluted earnings per share	$	0.69		$	1.08		$	3.17		$	4.26

Net operating income per diluted share	$	0.66		$	1.04		$	2.64		$	3.62


Weighted average shares outstanding - basic		113,968,287			57,090,930			94,682,279			57,006,908

Weighted average shares outstanding - diluted		114,831,467			58,035,775			95,459,375			57,767,137

[a]	Includes the results of Harbor Point Limited from May 12, 2010.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(Expressed in thousands of United States Dollars)


	Year Ended December 31
	2010			2009
Common shares
Balance, beginning of year	$	55,867		$	55,806
Issuance of common shares, net		65,384			1,604
Repurchase of common shares		(10,288	)		(1,543	)

Balance, end of year		110,963			55,867


Additional paid-in capital
Balance, beginning of year		752,309			763,391
Issuance of common shares, net		1,419,442			789
Stock based compensation expense		51,769			20,907
Repurchase of common shares		(197,475	)		(32,778	)

Balance, end of year		2,026,045			752,309


Accumulated other comprehensive income (loss)
Balance, beginning of year		25,431			(45,399	)
Holding gains on available for sale securities arising in period [a]		99,603			51,563
Net realized (gains) losses on available for sale securities included in net income [a]		(14,969	)		1,218
Portion of other-than-temporary impairment losses recognised in other comprehensive income [a]		(3,228	)		(2,237	)
Foreign currency translation adjustment		(7,891	)		20,286

Balance, end of year		98,946			25,431


Retained earnings
Balance, beginning of year		731,026			506,533
Net income		302,335			246,215
Dividends		(351,045	)		(21,722	)

Balance, end of year		682,316			731,026


Total shareholders’ equity	$	2,918,270		$	1,564,633

[a]	Net of tax

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Expressed in thousands of United States Dollars)


	Year Ended December 31
	2010			2009
OPERATING ACTIVITIES
Net income	$	302,335		$	246,215
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		51,769			20,907
Amortization of premium on fixed maturities		19,033			3,921
Accretion of deposit liabilities		6,289			2,907
Net realized and unrealized gains on investments		(16,872	)		(81,765	)
Net impairment losses recognized in earnings		2,645			3,078
Net realized gain on retirement of senior notes		—			(111	)
Negative goodwill gain		(95,788	)		—
Changes in:
Accrued interest income		(2,618	)		(4,206	)
Premiums receivable		342,630			(7,551	)
Losses and benefits recoverable from reinsurers		9,751			(145,863	)
Deferred acquisition costs		(43,716	)		(12,913	)
Prepaid reinsurance premiums		34,695			3,932
Other assets		(5,495	)		(2,050	)
Property and casualty losses		(105,958	)		199,201
Life and annuity benefits		(32,906	)		(21,070	)
Funds withheld from reinsurers		(18,962	)		(24,079	)
Unearned property and casualty premiums		(98,267	)		44,490
Reinsurance balances payable		(47,209	)		(15,579	)
Accounts payable and accrued expenses		6,941			(16,312	)

Cash provided by operating activities		308,297			193,152


INVESTING ACTIVITIES
Purchases of available for sale securities		(2,419,091	)		(1,212,911	)
Sales of available for sale securities		1,243,263			281,495
Redemptions/maturities of available for sale securities		953,552			625,434
Purchases of trading securities		(103,067	)		(195,151	)
Sales of trading securities		27,207			29,578
Redemptions/maturities of trading securities		54,010			8,347
Purchases of held to maturity securities		(27,953	)		(33,647	)
Redemptions/maturities of held to maturity securities		32,354			—
Net purchases/sales of other investments		110,849			534,244
Acquisition of subsidiary, net of cash acquired		446,819			(8,198	)

Cash provided by investing activities		317,943			29,191


FINANCING ACTIVITIES
Net proceeds from issuance of common shares		1,478			2,393
Repurchase of common shares		(207,764	)		(34,321	)
Net proceeds from issuance of senior notes		349,997			—
Net repayments of bank loans		(200,000	)		(375,000	)
Net repayments of senior notes		—			(811	)
Dividends paid		(349,495	)		(21,722	)
Additions to deposit liabilities		3,093			14,630
Payment of deposit liabilities		(14,336	)		(84,168	)

Cash used in financing activities		(417,027	)		(498,999	)


Effect of exchange rate changes on foreign currency cash and cash equivalents		(5,885	)		29,530

Net increase (decrease) in cash and cash equivalents		203,328			(247,126	)

Cash and cash equivalents, beginning of year		702,278			949,404

CASH AND CASH EQUIVALENTS, END OF YEAR	$	905,606		$	702,278

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid totaled $8,657 and $6,896 for the years ended December 31, 2010 and 2009, respectively.

Income taxes paid totaled $3,889 and $609 for the years ended December 31, 2010 and 2009, respectively.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED DECEMBER 31, 2010 (Unaudited)

(Expressed in thousands of United States Dollars)


Quarter Segment Information:	Property & Casualty															Life & Annuity			Corporate			Consolidated
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance

Gross premiums written	$	101,116		$	110,620		$	77,745		$	23,980		$	313,461		$	1,937		$	—		$	315,398
Reinsurance premiums ceded		(51,700	)		(2,908	)		(20,984	)		(1,859	)		(77,451	)		(166	)		—			(77,617	)

Net premiums written	$	49,416		$	107,712		$	56,761		$	22,121		$	236,010		$	1,771		$	—		$	237,781


Earned premiums	$	98,024		$	215,261		$	82,828		$	47,633		$	443,746		$	1,937		$	—		$	445,683
Earned premiums ceded		(41,104	)		(21,082	)		(28,883	)		(11,894	)		(102,963	)		(166	)		—			(103,129	)

Net premiums earned		56,920			194,179			53,945			35,739			340,783			1,771			—			342,554

Net investment income		6,495			17,965			1,282			4,246			29,988			12,084			19,008			61,080
Net realized and unrealized gains (losses) on investments		227			276			—			(3,893	)		(3,390	)		3,981			9,234			9,825
Net impairment losses recognized in earnings		—			—			—			—			—			—			(1,774	)		(1,774	)
Other income		—			(216	)		68			2,006			1,858			357			647			2,862


Total revenues		63,642			212,204			55,295			38,098			369,239			18,193			27,115			414,547

Net losses and loss expenses		31,842			97,639			35,723			13,843			179,047			—			—			179,047
Claims and policy benefits		—			—			—			—			—			18,551			—			18,551
Acquisition costs		1,628			38,406			8,755			4,853			53,642			(79	)		—			53,563
Interest expense		416			781			—			—			1,197			(501	)		7,170			7,866
Net foreign exchange (gains) losses		—			(271	)		—			65			(206	)		—			(176	)		(382	)
Merger and acquisition expenses		—			—			—			—			—			—			500			500
General and administrative expenses		9,782			24,714			9,582			12,186			56,264			1,088			19,407			76,759

Total losses and expenses		43,668			161,269			54,060			30,947			289,944			19,059			26,901			335,904

Income (loss) before taxes	$	19,974		$	50,935		$	1,235		$	7,151		$	79,295		$	(866	)	$	214		$	78,643


Loss Ratio [a]		55.9	%		50.3	%		66.2	%		38.7	%		52.5	%
Combined Ratio [b]		76.0	%		82.8	%		100.2	%		86.4	%		84.8	%

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–YEAR ENDED DECEMBER 31, 2010 (Unaudited)

(Expressed in thousands of United States Dollars)


Year to Date Segment Information [c]:	Property & Casualty															Life & Annuity			Corporate			Consolidated
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance

Gross premiums written	$	370,120		$	509,053		$	323,990		$	202,633		$	1,405,796		$	4,935		$	—		$	1,410,731
Reinsurance premiums ceded		(170,608	)		(64,131	)		(98,576	)		(37,448	)		(370,763	)		(400	)		—			(371,163	)

Net premiums written	$	199,512		$	444,922		$	225,414		$	165,185		$	1,035,033		$	4,535		$	—		$	1,039,568


Earned premiums	$	391,716		$	699,243		$	311,950		$	170,803		$	1,573,712		$	4,935		$	—		$	1,578,647
Earned premiums ceded		(173,123	)		(71,627	)		(125,218	)		(35,793	)		(405,761	)		(400	)		—			(406,161	)

Net premiums earned		218,593			627,616			186,732			135,010			1,167,951			4,535			—			1,172,486

Net investment income		25,134			60,072			5,233			11,554			101,993			49,785			70,680			222,458
Net realized and unrealized gains (losses) on investments		618			694			29			(4,476	)		(3,135	)		11,358			8,649			16,872
Net impairment losses recognized in earnings		—			—			—			—			—			—			(2,645	)		(2,645	)
Other income		760			—			507			2,534			3,801			286			721			4,808


Total revenues		245,105			688,382			192,501			144,622			1,270,610			65,964			77,405			1,413,979

Net losses and loss expenses		128,823			347,816			118,337			59,865			654,841			—			—			654,841
Claims and policy benefits		—			—			—			—			—			65,213			—			65,213
Acquisition costs		3,381			131,114			28,444			24,164			187,103			361			—			187,464
Interest expense		970			6,988			—			—			7,958			5,849			14,468			28,275
Net foreign exchange losses (gains)		—			1,696			—			(1,737	)		(41	)		—			(74	)		(115	)
Merger and acquisition expenses		—			—			—			—			—			—			(48,776	)		(48,776	)
General and administrative expenses		28,615			66,073			36,015			28,531			159,234			2,964			58,388			220,586

Total losses and expenses		161,789			553,687			182,796			110,823			1,009,095			74,387			24,006			1,107,488

Income (loss) before taxes	$	83,316		$	134,695		$	9,705		$	33,799		$	261,515		$	(8,423	)	$	53,399		$	306,491


Loss Ratio [a]		58.9	%		55.4	%		63.4	%		44.3	%		56.1	%
Combined Ratio [b]		73.6	%		86.8	%		97.9	%		83.4	%		85.7	%

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned.

[b]	The combined ratio is calculated by dividing the sum of net losses and loss expenses, acquisition costs and general and administrative expenses by net premiums earned.

[c]	Includes the results of Harbor Point Limited from May 12, 2010.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED DECEMBER 31, 2009 (Unaudited)

(Expressed in thousands of United States Dollars)


Quarter Segment Information:	Property & Casualty															Life & Annuity			Corporate			Consolidated
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance

Gross premiums written	$	125,040		$	66,732		$	66,210		$	18,344		$	276,326		$	2,007		$	—		$	278,333
Reinsurance premiums ceded		(66,007	)		569			(36,517	)		(921	)		(102,876	)		(267	)		—			(103,143	)

Net premiums written	$	59,033		$	67,301		$	29,693		$	17,423		$	173,450		$	1,740		$	—		$	175,190


Earned premiums	$	109,381		$	111,440		$	71,061		$	31,189		$	323,071		$	2,007		$	—		$	325,078
Earned premiums ceded		(53,417	)		(13,867	)		(42,886	)		(7,368	)		(117,538	)		(267	)		—			(117,805	)

Net premiums earned		55,964			97,573			28,175			23,821			205,533			1,740			—			207,273

Net investment income		6,014			10,613			1,438			1,172			19,237			13,367			12,064			44,668
Net realized and unrealized gains on investments		893			2,073			84			3			3,053			8,192			6,080			17,325
Net impairment losses recognized in earnings		—			—			—			—			—			—			(925	)		(925	)
Net realized gain on retirement of senior notes		—			—			—			—			—			—			111			111
Other income		—			—			42			183			225			(120	)		(301	)		(196	)


Total revenues		62,871			110,259			29,739			25,179			228,048			23,179			17,029			268,256

Net losses and loss expenses		26,326			61,718			16,312			10,514			114,870			—			—			114,870
Claims and policy benefits		—			—			—			—			—			16,976			—			16,976
Acquisition costs		270			17,578			1,628			3,339			22,815			373			—			23,188
Interest expense		781			4,191			—			—			4,972			525			1,188			6,685
Net foreign exchange losses		—			—			—			69			69			—			633			702
Merger and acquisition expenses		—			—			—			—			—			—			(224	)		(224	)
General and administrative expenses		6,798			8,174			10,034			4,116			29,122			606			8,730			38,458

Total losses and expenses		34,175			91,661			27,974			18,038			171,848			18,480			10,327			200,655

Income before taxes	$	28,696		$	18,598		$	1,765		$	7,141		$	56,200		$	4,699		$	6,702		$	67,601


Loss Ratio [a]		47.0	%		63.3	%		57.9	%		44.1	%		55.9	%
Combined Ratio [b]		59.7	%		89.6	%		99.3	%		75.4	%		81.2	%

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–YEAR ENDED DECEMBER 31, 2009 (Unaudited)

(Expressed in thousands of United States Dollars)


Year to Date Segment Information:	Property & Casualty															Life & Annuity			Corporate			Consolidated
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance

Gross premiums written	$	427,767		$	489,028		$	285,478		$	128,973		$	1,331,246		$	43,755		$	—		$	1,375,001
Reinsurance premiums ceded		(212,083	)		(80,005	)		(155,096	)		(32,884	)		(480,068	)		(413	)		—			(480,481	)

Net premiums written	$	215,684		$	409,023		$	130,382		$	96,089		$	851,178		$	43,342		$	—		$	894,520


Earned premiums	$	417,090		$	476,434		$	256,670		$	125,000		$	1,275,194		$	43,755		$	—		$	1,318,949
Earned premiums ceded		(211,127	)		(88,578	)		(154,568	)		(29,907	)		(484,180	)		(413	)		—			(484,593	)

Net premiums earned		205,963			387,856			102,102			95,093			791,014			43,342			—			834,356

Net investment income		22,875			40,220			5,987			4,388			73,470			50,993			45,278			169,741
Net realized and unrealized gains on investments		4,430			10,540			232			2,590			17,792			37,338			26,635			81,765
Net impairment losses recognized in earnings		—			—			—			—			—			—			(3,078	)		(3,078	)
Net realized gain on retirement of senior notes		—			—			—			—			—			—			111			111
Other income		1,238			12			314			658			2,222			(120	)		801			2,903


Total revenues		234,506			438,628			108,635			102,729			884,498			131,553			69,747			1,085,798

Net losses and loss expenses		132,355			254,474			62,812			43,958			493,599			—			—			493,599
Claims and policy benefits		—			—			—			—			—			101,093			—			101,093
Acquisition costs		(1,233	)		71,074			7,501			18,136			95,478			1,396			—			96,874
Interest expense		781			6,591			—			—			7,372			3,328			10,639			21,339
Net foreign exchange gains		—			—			—			(5,055	)		(5,055	)		—			(717	)		(5,772	)
Merger and acquisition expenses		—			—			—			—			—			—			(31,566	)		(31,566	)
General and administrative expenses		24,623			31,778			31,229			19,972			107,602			2,786			43,607			153,995

Total losses and expenses		156,526			363,917			101,542			77,011			698,996			108,603			21,963			829,562

Income before taxes	$	77,980		$	74,711		$	7,093		$	25,718		$	185,502		$	22,950		$	47,784		$	256,236


Loss Ratio [a]		64.3	%		65.6	%		61.5	%		46.2	%		62.4	%
Combined Ratio [b]		75.6	%		92.1	%		99.5	%		86.3	%		88.1	%

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned.

[b]	The combined ratio is calculated by dividing the sum of net losses and loss expenses, acquisition costs and general and administrative expenses by net premiums earned.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL PREMIUM DATA–YEAR ENDED DECEMBER 31, 2010 (Unaudited)

(Expressed in thousands of United States Dollars)


Gross Premiums Written by Type of Risk:		Year Ended December 31, 2010								Year Ended December 31, 2009
		Gross Premiums Written		Percentage of Total Gross Premiums Written			Movement on Prior Year Period			Gross Premiums Written		Percentage of Total Gross Premiums Written
Property & Casualty:
Insurance:
Aviation	S	$	39,888		2.8	%		(42.9	%)	$	69,834		5.1	%
Excess Liability	L		89,933		6.4	%		(20.9	%)		113,767		8.3	%
Professional Liability	L		177,199		12.6	%		(1.5	%)		179,904		13.1	%
Property	S		63,100		4.5	%		(1.8	%)		64,262		4.7	%

			370,120		26.2	%		(13.5	%)		427,767		31.1	%
Reinsurance [a]:
Agriculture	S		29,222		2.1	%		(67.4	%)		89,550		6.5	%
Auto	S		32,902		2.3	%		n/a			—		—
Aviation	S		31,292		2.2	%		(9.9	%)		34,715		2.5	%
Credit/ Surety	S		2,196		0.2	%		n/a			—		—
General Casualty	L		48,357		3.4	%		65.7	%		29,185		2.1	%
Marine & Energy	S		16,381		1.2	%		(10.6	%)		18,321		1.3	%
Medical Malpractice	L		51,391		3.6	%		(23.8	%)		67,483		4.9	%
Other	S		2,784		0.2	%		21.2	%		2,297		0.2	%
Professional Liability	L		110,427		7.8	%		54.4	%		71,531		5.2	%
Property	S		148,146		10.5	%		70.2	%		87,039		6.3	%
Whole Account	S/L		5,129		0.4	%		(55.2	%)		11,456		0.8	%
Workers’ Compensation	L		30,826		2.2	%		(60.2	%)		77,451		5.6	%

			509,053		36.1	%		4.1	%		489,028		35.6	%
U.S. Specialty:
General Liability	L		104,777		7.4	%		19.4	%		87,782		6.4	%
Marine	S		67,454		4.8	%		9.9	%		61,360		4.5	%
Professional Liability	L		12,454		0.9	%		n/a			576		0.0	%
Property	S		139,305		9.9	%		2.6	%		135,760		9.9	%

			323,990		23.0	%		13.5	%		285,478		20.8	%
Alterra at Lloyd’s:
Accident & Health	S		30,921		2.2	%		36.8	%		22,602		1.6	%
Aviation	S		16,138		1.1	%		n/a			2,611		0.2	%
Financial Institutions	L		19,448		1.4	%		(18.4	%)		23,822		1.7	%
International Casualty	L		26,174		1.9	%		n/a			—		—
Professional Liability	L		19,591		1.4	%		(1.5	%)		19,889		1.4	%
Property	S		85,553		6.1	%		42.5	%		60,049		4.4	%
Surety	S		4,808		0.3	%		n/a			—		—

			202,633		14.4	%		57.1	%		128,973		9.4	%

Aggregate Property & Casualty		$	1,405,796		99.7	%		5.6	%	$	1,331,246		96.8	%


Life & Annuity:
Annuity		$	1,135		0.1	%		n/a		$	—		—
Life			3,800		0.3	%		(91.3	%)		43,755		3.2	%


Aggregate Life & Annuity		$	4,935		0.3	%		(88.7	%)	$	43,755		3.2	%


Aggregate Property & Casualty and Life & Annuity		$	1,410,731		100.0	%		2.6	%	$	1,375,001		100.0	%


S = Short tail lines		$	712,655		50.7	%				$	654,128		49.1	%
L = Long tail lines			693,141		49.3	%					677,118		50.9	%

Aggregate Property & Casualty		$	1,405,796							$	1,331,246

[a]	Includes the results of Harbor Point Limited from May 12, 2010.

Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

NON-GAAP FINANCIAL MEASURE RECONCILIATIONS (Unaudited)

Net Operating Income and Net Operating Income per Diluted Share

(Expressed in thousands of United States Dollars, except per share and share amounts)


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009

Net income before tax	$	78,643		$	67,601		$	306,491		$	256,236
Net realized and unrealized (gains) losses on non-hedge fund investments, before tax [a]		(2,627	)		(2,064	)		65			(2,173	)
Foreign exchange (gains) losses, before tax		(382	)		702			(115	)		(5,772	)
Merger and acquisition expenses, before tax		500			(224	)		(48,776	)		(31,566	)

Net operating income before tax	$	76,134		$	66,015		$	257,665		$	216,725


Net income	$	79,670		$	62,592		$	302,335		$	246,215
Net realized and unrealized (gains) losses on non-hedge fund investments, net of tax [a]		(3,537	)		(2,576	)		(865	)		(1,411	)
Foreign exchange (gains) losses, net of tax		(417	)		682			363			(4,331	)
Merger and acquisition expenses, net of tax		500			(224	)		(50,121	)		(31,566	)

Net operating income	$	76,216		$	60,474		$	251,712		$	208,907


Net income per diluted share	$	0.69		$	1.08		$	3.17		$	4.26
Net realized and unrealized (gains) losses on non-hedge fund investments, net of tax [a]		(0.03	)		(0.05	)		(0.01	)		(0.02	)
Foreign exchange (gains) losses, net of tax		—			0.01			0.01			(0.07	)
Merger and acquisition expenses, net of tax		—			—			(0.53	)		(0.55	)

Net operating income per diluted share	$	0.66		$	1.04		$	2.64		$	3.62


Weighted average shares outstanding - basic		113,968,287			57,090,930			94,682,279			57,006,908

Weighted average shares outstanding - diluted		114,831,467			58,035,775			95,459,375			57,767,137

[a]

Net realized and unrealized (gains) losses on non-hedge fund investments includes realized and unrealized (gains) losses on trading securities, realised (gains) losses on available for sale securities, net impairment losses recognized in earnings, earnings from equity method investments and changes in fair value of investment derivatives, catastrophe bonds and structured deposits.

Annualized Net Operating Return on Average Shareholders’ Equity

(Expressed in thousands of United States Dollars)


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009

Net income	$	79,670		$	62,592		$	302,335		$	246,215
Annualized net income		318,680			250,368			302,335			246,215

Net operating income	$	76,216		$	60,474		$	251,712		$	208,907
Annualized net operating income		304,864			241,896			251,712			208,907

Average shareholders’ equity [b]	$	2,977,404		$	1,555,654		$	2,467,429		$	1,398,872

Annualized return on average shareholders’ equity		10.7	%		16.1	%		12.3	%		17.6	%
Annualized net operating return on average shareholders’ equity		10.2	%		15.5	%		10.2	%		14.9	%

[b]	Average shareholders’ equity is computed as the average of the quarterly average shareholders’ equity balances. The average for the year ended December 31, 2010 has been weighted to include Harbor Point Limited from May 12, 2010.

Diluted Tangible Book Value Per Share

(Expressed in thousands of United States Dollars, except per share and share amounts)


	December 31, 2010			December 31, 2009

Shareholders’ equity	$	2,918,270		$	1,564,633
Goodwill and intangible assets		(59,076	)		(48,686	)

Tangible book value	$	2,859,194		$	1,515,947


Diluted shares outstanding		112,290,968			57,178,458

Diluted tangible book value per share	$	25.46		$	26.51

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL INVESTMENT DATA–DECEMBER 31, 2010 (Unaudited)

(Expressed in thousands of United States Dollars)


Type of Investment	As of December 31, 2010		Investment Distribution			As of December 31, 2009		Investment Distribution

Cash and cash equivalents	$	905,606		11.5	%	$	702,278		13.3	%


U.S. government and agencies		995,546		12.7	%		525,427		10.0	%
Non-U.S. governments		79,111		1.0	%		82,027		1.6	%
Corporate securities		2,735,366		34.8	%		1,375,999		26.1	%
Municipal securities		238,014		3.0	%		83,658		1.6	%
Asset-backed securities		86,937		1.1	%		102,006		1.9	%
Residential mortgage-backed securities		1,168,390		14.9	%		763,974		14.5	%
Commercial mortgage-backed securities		334,151		4.3	%		302,961		5.8	%


Fixed maturities at fair value	$	5,637,515		71.7	%	$	3,236,052		61.5	%


U.S. government and agencies	$	29,687		0.4	%	$	14,050		0.3	%
Non-U.S. governments		538,274		6.8	%		573,250		10.9	%
Corporate securities		371,143		4.7	%		418,647		8.0	%
Asset-backed securities		1,000		0.0	%		—		0.0	%


Fixed maturities at amortized cost	$	940,104		12.0	%	$	1,005,947		19.1	%


Other investments	$	378,128		4.8	%	$	318,073		6.0	%


Total invested assets	$	7,861,353		100.0	%	$	5,262,350		100.0	%


Credit Rating	As of December 31, 2010		Ratings Distribution			As of December 31, 2009		Ratings Distribution

U.S. government and agencies [a]	$	2,060,116		31.3	%	$	1,214,895		28.6	%
AAA		1,076,680		16.4	%		720,364		17.0	%
AA		657,867		10.0	%		325,997		7.7	%
A		1,353,945		20.6	%		731,723		17.2	%
BBB		226,849		3.4	%		100,841		2.4	%
BB		32,021		0.5	%		34,781		0.8	%
B or lower		230,037		3.5	%		107,451		2.5	%

Fixed maturities at fair value	$	5,637,515		85.7	%	$	3,236,052		76.3	%

U.S. government and agencies	$	29,687		0.5	%	$	14,050		0.3	%
AAA		641,437		9.8	%		717,954		16.9	%
AA		113,140		1.7	%		101,675		2.4	%
A		141,683		2.2	%		158,141		3.7	%
BBB		12,744		0.2	%		12,672		0.3	%
BB		—		—			—		—
B or lower		1,413		0.0	%		1,455		0.0	%

Fixed maturities at amortized cost	$	940,104		14.3	%	$	1,005,947		23.7	%

Total fixed maturities	$	6,577,619		100.0	%	$	4,241,999		100.0	%

[a]	Included within U.S. government and agencies are agency-issued residential mortgage-backed securities with a fair value of $1,064,570 (December 31, 2009: $689,468)

Percentage

totals may not add due to rounding.


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009

Net investment income	$	61,080		$	44,668		$	222,458		$	169,741


Realized and unrealized (losses) gains on trading fixed maturities		(3,893	)		3			(4,476	)		2,590
Net realized gains on available for sale fixed maturities		5,816			3,234			15,474			1,885
Change in fair value of hedge funds		5,465			13,555			14,333			75,755
Change in fair value of non-hedge fund other investments		2,437			533			(8,459	)		1,535

Net realized and unrealized gains on investments	$	9,825		$	17,325		$	16,872		$	81,765


Net impairment losses recognized in earnings	$	(1,774	)	$	(925	)	$	(2,645	)	$	(3,078	)

ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED, DATED FEBRUARY 8, 2011 - February 8, 2011

Attached files