ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT FOR THE QUARTER ENDED DECEMBER 31, 2010.

Attached files

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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-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED, DATED FEBRUARY 8, 2011 - ALTERRA CAPITAL HOLDINGS Ltd	dex991.htm

Exhibit 99.2

LOGO


		ALTERRA CAPITAL HOLDINGS LIMITED

		Investor Financial Supplement

		Fourth Quarter 2010
		(Unaudited)

This supplement is for information purposes only. It should be read in conjunction with documents filed by Alterra Capital Holdings Limited with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act 1934.

Alterra Capital Holdings Limited

Investors:

Susan Spivak Bernstein, +1-212-898-6640

Media:

Kekst and Company

Roanne Kulakoff or Peter Hill, +1-212-521-4800

ALTERRA CAPITAL HOLDINGS LIMITED

FINANCIAL SUPPLEMENT TABLE OF CONTENTS


	Page

Financial Highlights		4
Consolidated Balance Sheets		5
Consolidated Statements of Income - Quarterly		6
Consolidated Statements of Income - Year to Date		7
Segment Data and Ratios - Quarterly		8
Gross Premiums Written by Line of Business - Quarterly		16
Segment Data and Ratios - Year to Date		18
Gross Premiums Written by Line of Business - Year to Date		25
Amalgamation with Harbor Point - Purchase Price		26
Investment Portfolio		27
Shareholder Return Analysis		30
Earnings Per Share Information		31
Operating Income Reconciliation		32
Book Value per Share		33
Regulation G		34
Pro forma Consolidated Statements of Income		35

ALTERRA CAPITAL HOLDINGS LIMITED

Cautionary note regarding forward-looking information

This financial supplement may include forward-looking statements that reflect Alterra’s current views with respect to future events and financial performance. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” “may” and similar statements of a future or forward-looking nature identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are important factors that could cause actual results to differ materially from those indicated in such statements and you should not place undue reliance on any such statements.

These factors include, but are not limited to, the following: (1) the adequacy of loss reserves and the need to adjust such reserves as claims develop over time; (2) the failure of any of the loss limitation methods employed; (3) the effect of cyclical trends, including with respect to demand and pricing in the insurance and reinsurance markets; (4) changes in general economic conditions, including changes in capital and credit markets; (5) any lowering or loss of financial ratings; (6) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding expectations; (7) actions by competitors, including consolidation; (8) the effects of emerging claims and coverage issues; (9) the loss of business provided to Alterra by its major brokers; (10) the effect on Alterra’s investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors; (11) tax and regulatory changes and conditions; (12) retention of key personnel; (13) the integration of new business ventures Alterra may enter into; and management’s response to any of the aforementioned factors.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the Risk Factors included in Alterra’s most recent reports on Form 10-K and Form 10-Q and other documents on file with the U.S. Securities and Exchange Commission. Any forward-looking statements made in this financial supplement are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Alterra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Alterra or its business or operations. Alterra undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

ALTERRA CAPITAL HOLDINGS LIMITED

FINANCIAL HIGHLIGHTS

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


	For The Quarters Ended						For The Year Ended
	December 31, 2010			December 31, 2009			December 31, 2010			December 31, 2009			Previous Year Quarter Change			Previous Year to Date Change
HIGHLIGHTS
Net income	$	79,670		$	62,592		$	302,335		$	246,215			27.3	%		22.8	%
Net operating income [a]		76,216			60,474			251,712			208,907			26.0	%		20.5	%
Operating cashflow		139,284			(56,699	)		308,297			193,152			n/a			59.6	%
Gross premiums written		315,398			278,333			1,410,731			1,375,001			13.3	%		2.6	%
Net premiums earned		342,554			207,273			1,172,486			834,356			65.3	%		40.5	%
Total assets		9,917,288			7,339,746			9,917,288			7,339,746			35.1	%		35.1	%
Total shareholders’ equity		2,918,270			1,564,633			2,918,270			1,564,633			86.5	%		86.5	%

PER SHARE
Basic earnings per share
Net income	$	0.70		$	1.10		$	3.19		$	4.32
Net operating income [a]		0.67			1.06			2.66			3.66
Diluted earnings per share
Net income	$	0.69		$	1.08		$	3.17		$	4.26
Net operating income [a]		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

Book value per common share [b]	$	26.30		$	28.01		$	26.30		$	28.01			(6.1	%)		(6.1	%)
Diluted book value per share (treasury stock method) [b]		25.99			27.36			25.99			27.36			(5.0	%)		(5.0	%)
Diluted tangible book value per share (treasury stock method) [b]		25.46			26.51			25.46			26.51			(4.0	%)		(4.0	%)

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

Loss ratio [d]		52.5	%		55.9	%		56.1	%		62.4	%
Acquisition cost ratio [d]		15.7	%		11.1	%		16.0	%		12.1	%
General and administrative expense ratio [d]		16.6	%		14.2	%		13.6	%		13.6	%
Combined ratio [d]		84.8	%		81.2	%		85.7	%		88.1	%

[a]	Net operating income represents net income excluding, as applicable, after-tax net realized and unrealized gains and losses on non-hedge fund investments, after-tax net foreign exchange gains or losses, and after-tax merger and acquisition expenses.

[b]	For detailed calculations see page 33.

[c]	For detailed calculations see page 30.

[d]	For property and casualty business only.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

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


	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010			Dec. 31, 2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
ASSETS
Cash and cash equivalents	$	905,606		$	925,752		$	741,684		$	690,246		$	702,278
Fixed maturities, trading, at fair value		244,872			243,158			230,251			219,332			228,696
Fixed maturities, available for sale, at fair value		5,392,643			5,425,955			5,451,969			3,158,131			3,007,356
Fixed maturities, held to maturity, at amortized cost		940,104			954,623			871,651			954,696			1,005,947
Other investments, at fair value		378,128			411,275			436,757			325,359			318,073
Accrued interest income		75,414			73,622			67,561			51,906			57,215
Premiums receivable		588,537			664,603			780,025			617,560			567,301
Losses and benefits recoverable from reinsurers		956,115			976,819			962,442			1,023,224			1,001,373
Deferred acquisition costs		111,901			106,728			89,881			72,195			65,648
Prepaid reinsurance premiums		149,252			173,140			207,102			232,947			190,613
Trades pending settlement		32,393			24,364			—			—			76,031
Goodwill and intangible assets		59,076			60,670			60,670			48,686			48,686
Other assets		83,247			78,225			74,943			79,924			70,529

Total assets	$	9,917,288		$	10,118,934		$	9,974,936		$	7,474,206		$	7,339,746


LIABILITIES
Property and casualty losses	$	3,906,134		$	3,847,366		$	3,772,622		$	3,220,357		$	3,178,094
Life and annuity benefits		1,275,580			1,299,190			1,209,031			1,306,916			1,372,513
Deposit liabilities		147,612			147,212			147,727			149,028			152,629
Funds withheld from reinsurers		121,107			119,859			120,324			138,984			140,079
Unearned property and casualty premiums		905,487			1,015,831			1,090,323			690,013			628,161
Reinsurance balances payable		102,942			122,184			295,979			168,329			146,085
Accounts payable and accrued expenses		99,680			90,282			81,846			61,955			67,088
Trades pending settlement		—			—			39,641			35,033			—
Bank loans		—			—			200,000			—			—
Senior notes		440,476			440,473			90,476			90,475			90,464

Total liabilities		6,999,018			7,082,397			7,047,969			5,861,090			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 shares issued and outstanding		110,963			115,899			118,643			56,980			55,867
Additional paid-in capital		2,026,045			2,113,732			2,157,700			744,466			752,309
Accumulated other comprehensive income		98,946			190,325			102,718			49,822			25,431
Retained earnings		682,316			616,581			547,906			761,848			731,026

Total shareholders’ equity		2,918,270			3,036,537			2,926,967			1,613,116			1,564,633


Total liabilities and shareholders’ equity	$	9,917,288		$	10,118,934		$	9,974,936		$	7,474,206		$	7,339,746


Book value per share	$	26.30		$	26.20		$	24.67		$	28.31		$	28.01


Diluted book value per share (treasury stock method)	$	25.99		$	25.88		$	24.55		$	27.86		$	27.36


Diluted tangible book value per share (treasury stock method)	$	25.46		$	25.37		$	24.04		$	27.02		$	26.51


Debt-to-capital ratio [a]		13.1	%		12.7	%		9.0	%		5.3	%		5.5	%

[a]	Calculated as debt, being bank loans and senior notes, divided by shareholders’ equity plus debt.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - QUARTERLY (Unaudited)

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


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010 [f]			Mar. 31, 2010			Dec. 31, 2009			Dec. 31, 2008
REVENUES
Gross premiums written	$	315,398		$	325,213		$	398,981		$	371,139		$	278,333		$	372,065
Reinsurance premiums ceded		(77,617	)		(60,611	)		(79,715	)		(153,220	)		(103,143	)		(114,196	)

Net premiums written	$	237,781		$	264,602		$	319,266		$	217,919		$	175,190		$	257,869


Earned premiums	$	445,683		$	436,244		$	391,723		$	304,997		$	325,078		$	409,572
Earned premiums ceded		(103,129	)		(93,812	)		(98,463	)		(110,757	)		(117,805	)		(108,073	)

Net premiums earned		342,554			342,432			293,260			194,240			207,273			301,499

Net investment income		61,080			59,711			53,277			48,390			44,668			44,226
Net realized and unrealized gains (losses) on investments		9,825			15,411			(14,786	)		6,422			17,325			(88,951	)

Total other-than-temporary impairment losses		(3,918	)		(90	)		(1,167	)		(698	)		(125	)		—
Portion of loss recognized in other comprehensive income (loss) before taxes		2,144			(61	)		867			278			(800	)		—

Net impairment losses recognized in earnings		(1,774	)		(151	)		(300	)		(420	)		(925	)		—

Net realized gain on retirement of senior notes		—			—			—			—			111			2,245
Other income		2,862			1,327			275			344			(196	)		457

Total revenues		414,547			418,730			331,726			248,976			268,256			259,476


LOSSES AND EXPENSES
Net losses and loss expenses		179,047			191,012			159,817			124,965			114,870			115,160
Claims and policy benefits		18,551			15,060			13,943			17,659			16,976			164,351
Acquisition costs		53,563			60,859			48,798			24,244			23,188			16,635
Interest expense		7,866			7,551			7,916			4,942			6,685			15,542
Net foreign exchange (gains) losses		(382	)		3,353			(634	)		(2,452	)		702			7,889
Merger and acquisition expenses		500			550			(54,570	)		4,744			(224	)		(544	)
General and administrative expenses		76,759			56,650			50,649			36,528			38,458			34,468

Total losses and expenses		335,904			335,035			225,919			210,630			200,655			353,501


INCOME (LOSS) BEFORE TAXES		78,643			83,695			105,807			38,346			67,601			(94,025	)

Income tax (benefit) expense		(1,027	)		858			2,360			1,965			5,009			58


NET INCOME (LOSS)		79,670			82,837			103,447			36,381			62,592			(94,083	)

Change in net unrealized gains and losses on fixed maturities, net of tax		(87,633	)		74,383			60,525			34,131			(16,085	)		118,821
Foreign currency translation adjustment		(3,746	)		13,224			(7,629	)		(9,740	)		(86	)		(17,471	)

COMPREHENSIVE (LOSS) INCOME	$	(11,709	)	$	170,444		$	156,343		$	60,772		$	46,421		$	7,267


KEY RATIOS/PER SHARE DATA

Loss ratio [a]		52.5	%		56.0	%		54.6	%		64.6	%		55.9	%		74.9	%
Acquisition cost ratio [b]		15.7	%		17.8	%		16.6	%		12.5	%		11.1	%		11.2	%
General and administrative expense ratio [c]		16.6	%		12.2	%		12.1	%		13.4	%		14.2	%		13.5	%

Combined ratio		84.8	%		86.0	%		83.3	%		90.5	%		81.2	%		99.6	%


Basic earnings per share	$	0.70		$	0.71		$	1.14		$	0.64		$	1.10		$	(1.67	)
Diluted earnings per share	$	0.69		$	0.70		$	1.13		$	0.63		$	1.08		$	(1.67	)
Net operating income per share - diluted [d]	$	0.66		$	0.64		$	0.64		$	0.71		$	1.04		$	(1.52	)

Annualized ROAE [e]		10.7	%		11.1	%		17.8	%		9.2	%		16.1	%		(29.5	%)
Annualized Net Operating ROAE [e]		10.2	%		10.2	%		10.1	%		10.2	%		15.5	%		(26.8	%)

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned for the property & casualty business

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business

[d]	See page 32 for calculation of net operating income per share - diluted.

[e]	See page 30 for calculation of annualized return on average shareholders’ equity (ROAE) and annualized net operating ROAE

[f]	Includes the results for Harbor Point Limited (“Harbor Point”) from May 12, 2010.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - YEAR TO DATE AND PRIOR YEARS (Unaudited)

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


	YEAR ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008
REVENUES
Gross premiums written	$	1,410,731		$	1,375,001		$	1,254,250
Reinsurance premiums ceded		(371,163	)		(480,481	)		(414,047	)

Net premiums written	$	1,039,568		$	894,520		$	840,203


Earned premiums	$	1,578,647		$	1,318,949		$	1,170,248
Earned premiums ceded		(406,161	)		(484,593	)		(356,738	)

Net premiums earned		1,172,486			834,356			813,510

Net investment income		222,458			169,741			181,624
Net realized and unrealized gains (losses) on investments		16,872			81,765			(234,965	)

Total other-than-temporary impairment losses		(5,873	)		(5,315	)		(16,887	)
Portion of loss recognized in other comprehensive income (loss) before taxes		3,228			2,237			—

Net impairment losses recognized in earnings		(2,645	)		(3,078	)		(16,887	)

Net realized gain on retirement of senior notes		—			111			2,245
Other income		4,808			2,903			1,458

Total revenues		1,413,979			1,085,798			746,985


LOSSES AND EXPENSES
Net losses and loss expenses		654,841			493,599			393,745
Claims and policy benefits		65,213			101,093			301,526
Acquisition costs		187,464			96,874			52,379
Interest expense		28,275			21,339			36,089
Net foreign exchange (gains) losses		(115	)		(5,772	)		9,873
Merger and acquisition expenses		(48,776	)		(31,566	)		2,944
General and administrative expenses		220,586			153,995			124,515

Total losses and expenses		1,107,488			829,562			921,071


INCOME (LOSS) BEFORE TAXES		306,491			256,236			(174,086	)

Income tax expense		4,156			10,021			1,232


NET INCOME (LOSS)		302,335			246,215			(175,318	)

Change in net unrealized gains and losses on fixed maturities, net of tax		81,406			50,544			9,882
Foreign currency translation adjustment		(7,891	)		20,286			(34,940	)

COMPREHENSIVE INCOME (LOSS)	$	375,850		$	317,045		$	(200,376	)


KEY RATIOS/PER SHARE DATA

Loss ratio [a]		56.1	%		62.4	%		68.9	%
Acquisition cost ratio [b]		16.0	%		12.1	%		9.2	%
General and administrative expense ratio [c]		13.6	%		13.6	%		13.8	%

Combined ratio		85.7	%		88.1	%		91.9	%


Net income per share - basic	$	3.19		$	4.32		$	(3.10	)
Net income per share - diluted	$	3.17		$	4.26		$	(3.10	)
Net operating income per share - diluted	$	2.64		$	3.62		$	(2.54	)

Annualized ROAE [d]		12.3	%		17.6	%		(12.3	%)
Annualized Net Operating ROAE [d]		10.2	%		14.9	%		(10.1	%)

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned for the property & casualty business

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business

[d]	See page 30 for calculation of annualized return on average shareholders’ equity (ROAE) and annualized net operating ROAE

[e]	Includes the results for Harbor Point from May 12, 2010.

ALTERRA CAPITAL HOLDINGS LIMITED

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

(Expressed in thousands of United States Dollars)


	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	%
Acquisition cost ratio [b]		2.9	%		19.8	%		16.2	%		13.6	%		15.7	%
General and administrative expense ratio [c]		17.2	%		12.7	%		17.8	%		34.1	%		16.6	%

Combined ratio		76.0	%		82.8	%		100.2	%		86.4	%		84.8	%

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned for the property & casualty business

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED UNDERWRITING RATIOS - THREE MONTHS ENDED DECEMBER 31, 2010 (Unaudited)


	Property & Casualty
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total

UNDERWRITING RATIOS

Loss ratio		55.9	%		50.3	%		66.2	%		38.7	%		52.5	%
Acquisition cost ratio		2.9	%		19.8	%		16.2	%		13.6	%		15.7	%
General and administrative expense ratio		17.2	%		12.7	%		17.8	%		34.1	%		16.6	%

Combined ratio		76.0	%		82.8	%		100.2	%		86.4	%		84.8	%


EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)

Loss ratio [a]		21.8	%		5.0	%		0.2	%		16.3	%		8.3	%


NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS

Loss ratio		77.7	%		55.3	%		66.4	%		55.0	%		60.8	%
Acquisition cost ratio		2.9	%		19.8	%		16.2	%		13.6	%		15.7	%
General and administrative expense ratio		17.2	%		12.7	%		17.8	%		34.1	%		16.6	%

Combined ratio		97.8	%		87.8	%		100.4	%		102.7	%		93.1	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

CONSOLIDATED UNDERWRITING RATIOS - THREE MONTHS ENDED DECEMBER 31, 2009 (Unaudited)


	Property & Casualty
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Historical Harbor Point [b]

UNDERWRITING RATIOS

Loss ratio		47.0	%		63.3	%		57.9	%		44.1	%		55.9	%		41.2	%
Acquisition cost ratio		0.5	%		18.0	%		5.8	%		14.0	%		11.1	%		21.9	%
General and administrative expense ratio		12.2	%		8.3	%		35.6	%		17.3	%		14.2	%		11.5	%

Combined ratio		59.7	%		89.6	%		99.3	%		75.4	%		81.2	%		74.6	%


EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)

Loss ratio [a]		26.7	%		12.2	%		2.3	%		14.1	%		15.0	%		8.7	%


NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS

Loss ratio		73.7	%		75.5	%		60.2	%		58.2	%		70.9	%		49.9	%
Acquisition cost ratio		0.5	%		18.0	%		5.8	%		14.0	%		11.1	%		21.9	%
General and administrative expense ratio		12.2	%		8.3	%		35.6	%		17.3	%		14.2	%		11.5	%

Combined ratio		86.4	%		101.8	%		101.6	%		89.5	%		96.2	%		83.3	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

[b]	Provided for informational purposes only.

ALTERRA CAPITAL HOLDINGS LIMITED

INSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	101,116		$	70,271		$	132,312		$	66,421		$	125,040		$	113,080
Reinsurance premiums ceded		(51,700	)		(34,075	)		(46,257	)		(38,576	)		(66,007	)		(64,999	)

Net premiums written	$	49,416		$	36,196		$	86,055		$	27,845		$	59,033		$	48,081


Earned premiums	$	98,024		$	96,777		$	99,874		$	97,041		$	109,381		$	92,988
Earned premiums ceded		(41,104	)		(41,097	)		(43,676	)		(47,246	)		(53,417	)		(48,134	)

Net premiums earned		56,920			55,680			56,198			49,795			55,964			44,854

Net investment income		6,495			6,209			6,261			6,169			6,014			5,124
Net realized and unrealized gains (losses) on investments		227			188			(103	)		306			893			(9,923	)
Other income		—			771			—			(11	)		—			—


Total revenues		63,642			62,848			62,356			56,259			62,871			40,055

Net losses and loss expenses		31,842			23,775			35,927			37,279			26,326			33,331
Acquisition costs		1,628			1,265			797			(309	)		270			(865	)
Interest expense		416			80			240			234			781			—
General and administrative expenses		9,782			6,435			6,501			5,897			6,798			5,049

Total losses and expenses		43,668			31,555			43,465			43,101			34,175			37,515

Income before taxes	$	19,974		$	31,293		$	18,891		$	13,158		$	28,696		$	2,540


Loss ratio		55.9	%		42.7	%		63.9	%		74.9	%		47.0	%		74.3	%
Acquisition cost ratio		2.9	%		2.3	%		1.4	%		(0.6	%)		0.5	%		(1.9	%)
General and administrative expense ratio		17.2	%		11.5	%		11.6	%		11.8	%		12.2	%		11.2	%

Combined ratio		76.0	%		56.5	%		76.9	%		86.1	%		59.7	%		83.6	%

ALTERRA CAPITAL HOLDINGS LIMITED

REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010 [a]			Mar. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	110,620		$	124,004		$	119,578		$	154,851		$	66,732		$	42,025
Reinsurance premiums ceded		(2,908	)		(2,524	)		(13,348	)		(45,351	)		569			(7,288	)

Net premiums written	$	107,712		$	121,480		$	106,230		$	109,500		$	67,301		$	34,737


Earned premiums	$	215,261		$	213,510		$	174,729		$	95,743		$	111,440		$	115,494
Earned premiums ceded		(21,082	)		(15,533	)		(19,054	)		(15,958	)		(13,867	)		(26,549	)

Net premiums earned		194,179			197,977			155,675			79,785			97,573			88,945

Net investment income		17,965			17,495			13,708			10,904			10,613			8,272
Net realized and unrealized gains (losses) on investments		276			197			(97	)		318			2,073			(21,458	)
Other income		(216	)		61			155			—			—			—


Total revenues		212,204			215,730			169,441			91,007			110,259			75,759

Net losses and loss expenses		97,639			117,671			82,441			50,065			61,718			68,423
Acquisition costs		38,406			45,069			32,673			14,966			17,578			16,154
Interest expense		781			1,149			3,357			1,701			4,191			5,134
Net foreign exchange (gains) losses		(271	)		1,478			489			—			—			—
General and administrative expenses		24,714			17,580			14,820			8,959			8,174			6,567

Total losses and expenses		161,269			182,947			133,780			75,691			91,661			96,278


Income (loss) before taxes	$	50,935		$	32,783		$	35,661		$	15,316		$	18,598		$	(20,519	)


Loss ratio		50.3	%		59.4	%		53.0	%		62.7	%		63.3	%		76.9	%
Acquisition cost ratio		19.8	%		22.8	%		21.0	%		18.8	%		18.0	%		18.2	%
General and administrative expense ratio		12.7	%		8.9	%		9.5	%		11.2	%		8.3	%		7.4	%

Combined ratio		82.8	%		91.1	%		83.5	%		92.7	%		89.6	%		102.5	%

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

ALTERRA CAPITAL HOLDINGS LIMITED

PRO FORMA ALTERRA REINSURANCE SEGMENT SELECTED FINANCIAL INFORMATION [a] (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Sept. 30, 2009			June 30, 2009			Mar. 31, 2009

Gross premiums written	$	110,620		$	124,004		$	197,146		$	460,618		$	125,447		$	210,882		$	262,938		$	461,141

Net premiums earned		194,179			197,977			226,291			215,050			230,516			238,953			221,120			220,103

Net losses and loss expenses		97,639			117,671			136,158			129,727			108,941			113,625			118,613			115,706

Acquisition costs		38,406			45,069			47,179			42,689			46,708			50,167			42,586			43,280

General and administrative expenses		24,714			17,580			16,527			16,824			23,680			19,726			18,520			19,201

Loss ratio		50.3	%		59.4	%		60.2	%		60.3	%		47.3	%		47.6	%		53.6	%		52.6	%
Acquisition cost ratio		19.8	%		22.8	%		20.8	%		19.9	%		20.3	%		21.0	%		19.3	%		19.7	%
General and administrative expense ratio		12.7	%		8.9	%		7.3	%		7.8	%		10.2	%		8.2	%		8.4	%		8.7	%

Combined ratio		82.8	%		91.1	%		88.3	%		88.0	%		77.8	%		76.8	%		81.3	%		81.0	%

[a]

This information is based on historical Alterra reinsurance segment financial information adjusted to include Harbor Point historical financial information as though the amalgamation with Harbor Point had occurred on January 1, 2009. The financial information also includes adjustments to eliminate any intercompany transactions and to reflect the amortization of certain acquisition accounting fair value adjustments.

The pro forma information is provided for informational purposes only. The pro forma information does not necessarily represent results that would have occurred if the amalgamation had occurred on January 1, 2009, nor is it necessarily indicative of future results.

ALTERRA CAPITAL HOLDINGS LIMITED

U.S. SPECIALTY SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	77,745		$	71,871		$	97,487		$	76,887		$	66,210		$	60,191
Reinsurance premiums ceded		(20,984	)		(21,513	)		(6,852	)		(49,227	)		(36,517	)		(37,376	)

Net premiums written	$	56,761		$	50,358		$	90,635		$	27,660		$	29,693		$	22,815


Earned premiums	$	82,828		$	79,200		$	76,032		$	73,890		$	71,061		$	43,502
Earned premiums ceded		(28,883	)		(27,770	)		(28,588	)		(39,977	)		(42,886	)		(27,803	)

Net premiums earned		53,945			51,430			47,444			33,913			28,175			15,699

Net investment income		1,282			1,295			1,315			1,341			1,438			1,672
Net realized and unrealized gains (losses) on investments		—			30			(1	)		—			84			—
Other income		68			337			97			5			42			163


Total revenues		55,295			53,092			48,855			35,259			29,739			17,534

Net losses and loss expenses		35,723			32,199			29,052			21,363			16,312			10,936
Acquisition costs		8,755			6,880			9,135			3,674			1,628			980
General and administrative expenses		9,582			9,975			7,986			8,472			10,034			6,636

Total losses and expenses		54,060			49,054			46,173			33,509			27,974			18,552


Income (loss) before taxes	$	1,235		$	4,038		$	2,682		$	1,750		$	1,765		$	(1,018	)


Loss ratio		66.2	%		62.6	%		61.2	%		63.0	%		57.9	%		69.7	%
Acquisition cost ratio		16.2	%		13.4	%		19.3	%		10.8	%		5.8	%		6.2	%
General and administrative expense ratio		17.8	%		19.4	%		16.8	%		25.0	%		35.6	%		42.3	%

Combined ratio		100.2	%		95.4	%		97.3	%		98.8	%		99.3	%		118.2	%

ALTERRA CAPITAL HOLDINGS LIMITED

ALTERRA AT LLOYD’S SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Dec. 31, 2008 [a]

Gross premiums written	$	23,980		$	57,734		$	48,802		$	72,117		$	18,344		$	8,844
Reinsurance premiums ceded		(1,859	)		(2,397	)		(13,233	)		(19,959	)		(921	)		(4,294	)

Net premiums written	$	22,121		$	55,337		$	35,569		$	52,158		$	17,423		$	4,550


Earned premiums	$	47,633		$	45,424		$	40,286		$	37,460		$	31,189		$	9,663
Earned premiums ceded		(11,894	)		(9,310	)		(7,120	)		(7,469	)		(7,368	)		(5,349	)

Net premiums earned		35,739			36,114			33,166			29,991			23,821			4,314

Net investment income		4,246			2,256			3,035			2,017			1,172			542
Net realized and unrealized (losses) gains on investments		(3,893	)		883			(1,284	)		(182	)		3			508
Other income		2,006			177			173			178			183			160


Total revenues		38,098			39,430			35,090			32,004			25,179			5,524

Net losses and loss expenses		13,843			17,367			12,397			16,258			10,514			2,470
Acquisition costs		4,853			7,474			6,070			5,767			3,339			981
Net foreign exchange losses (gains)		65			2,089			(1,182	)		(2,709	)		69			(382	)
General and administrative expenses		12,186			7,806			5,826			2,713			4,116			2,525

Total losses and expenses		30,947			34,736			23,111			22,029			18,038			5,594


Income (loss) before taxes	$	7,151		$	4,694		$	11,979		$	9,975		$	7,141		$	(70	)


Loss ratio		38.7	%		48.1	%		37.4	%		54.2	%		44.1	%		57.3	%
Acquisition cost ratio		13.6	%		20.7	%		18.3	%		19.2	%		14.0	%		22.7	%
General and administrative expense ratio		34.1	%		21.6	%		17.5	%		9.1	%		17.3	%		58.5	%

Combined ratio		86.4	%		90.4	%		73.2	%		82.5	%		75.4	%		138.5	%

[a]	The results of operations for the Alterra at Lloyd’s segment are consolidated only from November 6, 2008, the date Alterra at Lloyd’s was acquired.

ALTERRA CAPITAL HOLDINGS LIMITED

LIFE AND ANNUITY REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	1,937		$	1,333		$	802		$	863		$	2,007		$	147,925
Reinsurance premiums ceded		(166	)		(102	)		(25	)		(107	)		(267	)		(239	)

Net premiums written	$	1,771		$	1,231		$	777		$	756		$	1,740		$	147,686


Earned premiums	$	1,937		$	1,333		$	802		$	863		$	2,007		$	147,925
Earned premiums ceded		(166	)		(102	)		(25	)		(107	)		(267	)		(238	)

Net premiums earned		1,771			1,231			777			756			1,740			147,687

Net investment income		12,084			12,182			12,420			13,099			13,367			10,126
Net realized and unrealized gains (losses) on investments		3,981			3,321			(1,860	)		5,916			8,192			(42,170	)
Other income		357			(43	)		—			(28	)		(120	)		—


Total revenues		18,193			16,691			11,337			19,743			23,179			115,643

Claims and policy benefits		18,551			15,060			13,943			17,659			16,976			164,351
Acquisition costs		(79	)		171			123			146			373			(615	)
Interest expense		(501	)		2,311			2,676			1,363			525			4,722
General and administrative expenses		1,088			577			642			657			606			644

Total losses and expenses		19,059			18,119			17,384			19,825			18,480			169,102


(Loss) income before taxes	$	(866	)	$	(1,428	)	$	(6,047	)	$	(82	)	$	4,699		$	(53,459	)

ALTERRA CAPITAL HOLDINGS LIMITED

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS (Unaudited)

(Expressed in thousands of United States Dollars)


Gross Premiums Written by Type of Risk:		FOR THE QUARTERS ENDED
		Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010		Dec. 31, 2009			Dec. 31, 2008
Property & Casualty:
Insurance:
Aviation	S	$	22,677		$	8,247		$	6,615		$	2,349	$	39,520		$	31,164
Excess Liability	L		18,703			14,384			33,198			23,648		26,683			26,933
Professional Liability	L		47,737			36,673			65,216			27,573		45,059			42,575
Property	S		11,999			10,967			27,283			12,851		13,778			12,408

			101,116			70,271			132,312			66,421		125,040			113,080

Reinsurance [a]:
Agriculture	S	$	(1,406	)		(2,665	)		(2,513	)		35,806		2,212			234
Auto	S		22,585			10,251			66			—		—			—
Aviation	S		2,596			15,313			8,561			4,822		9,380			3,809
Credit/ Surety	S		1,118			2,569			(1,491	)		—		—			—
General Casualty	L		17,658			18,505			(857	)		13,051		5,781			1,926
Marine & Energy	S		(1,549	)		8,826			5,004			4,100		3,599			4,877
Medical Malpractice	L		19,554			(3,131	)		7,813			27,155		11,086			12,578
Other	S		520			1,183			92			989		29			(914	)
Professional Liability	L		28,538			37,965			32,005			11,919		25,609			9,412
Property	S		6,296			34,859			61,058			45,933		(2,375	)		1,506
Whole Account	S/L		426			(232	)		2,362			2,573		2,947			2,425
Workers’ Compensation	L		14,284			561			7,478			8,503		8,464			6,172

			110,620			124,004			119,578			154,851		66,732			42,025

U.S. Specialty:
General Liability	L	$	28,572			25,566			27,625			23,014		18,756			16,989
Marine	S		17,758			15,637			17,996			16,063		15,443			12,944
Professional Liability	L		2,928			3,613			3,667			2,246		576			—
Property	S		28,487			27,055			48,199			35,564		31,435			30,258

			77,745			71,871			97,487			76,887		66,210			60,191

Alterra at Lloyd’s [b]:
Accident & Health	S	$	5,570			5,919			6,022			13,410		1,245			408
Aviation	S		5,224			3,946			2,565			4,403		2,611			—
Financial Institutions	L		384			8,130			4,846			6,088		5,446			4,062
International Casualty	L		2,213			4,095			6,182			13,684		—			—
Professional Liability	L		4,204			4,330			4,161			6,896		5,290			2,928
Property	S		5,946			26,945			25,026			27,636		3,752			1,446
Surety	S		439			4,369			—			—		—			—

			23,980			57,734			48,802			72,117		18,344			8,844


Aggregate Property & Casualty		$	313,461		$	323,880		$	398,179		$	370,276	$	276,326		$	224,140


Life & Annuity:
Annuity		$	1,129		$	—		$	6		$	—	$	—		$	146,734
Life			808			1,333			796			863		2,007			1,191


Aggregate Life & Annuity			1,937			1,333			802			863		2,007			147,925


Aggregate Property & Casualty and Life & Annuity		$	315,398		$	325,213		$	398,981		$	371,139	$	278,333		$	372,065


[a] Includes the results for Harbor Point from May 12, 2010. [b] Includes the results for Alterra at Lloyd’s from November 6, 2008.

S = Short tail lines		$	128,473		$	173,305		$	205,664		$	205,213	$	122,103		$	99,353
L = Long tail lines			184,988			150,575			192,515			165,064		154,224			124,788

Aggregate Property & Casualty		$	313,461		$	323,880		$	398,179		$	370,276	$	276,326		$	224,140

ALTERRA CAPITAL HOLDINGS LIMITED

PRO FORMA ALTERRA REINSURANCE SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS [a] (Unaudited)

(Expressed in thousands of United States Dollars)


Gross Premiums Written by Type of Risk:		FOR THE QUARTERS ENDED
		Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010		Dec. 31, 2009		Sept. 30, 2009			June 30, 2009			Mar. 31, 2009

Agriculture	S	$	(1,406	)	$	(2,665	)	$	(4,643	)	$	55,944	$	2,153	$	(96	)	$	(262	)	$	91,196
Auto	S		22,585			10,251			14,359			18,063		19,531		12,828			11,288			15,148
Aviation	S		2,596			15,313			8,586			6,191		9,395		18,154			10,760			4,509
Credit/ Surety	S		1,118			2,569			1,530			23,555		9,058		369			2,440			8,828
General Casualty	L		17,658			18,505			6,724			42,398		15,607		31,167			10,225			36,892
Marine & Energy	S		(1,549	)		8,826			5,220			21,128		4,033		8,565			(3,731	)		37,799
Medical Malpractice	L		19,554			(3,131	)		6,424			33,804		11,093		7,077			21,783			36,417
Other	S		520			1,183			294			5,664		168		(57	)		485			3,011
Professional Liability	L		28,538			37,965			51,615			55,812		37,407		60,373			53,705			50,629
Property	S		6,296			34,859			96,745			138,958		2,260		34,240			118,581			142,118
Whole Account	S/L		426			(232	)		3,095			47,135		6,578		4,569			18,503			5,369
Workers’ Compensation	L		14,284			561			7,197			11,966		8,164		33,693			19,161			29,225

Aggregate Pro Forma Reinsurance Segment		$	110,620		$	124,004		$	197,146		$	460,618	$	125,447	$	210,882		$	262,938		$	461,141

[a]

This information is based on historical Alterra reinsurance segment gross premiums written adjusted to include Harbor Point historical gross premiums written as though the amalgamation with Harbor Point had occurred on January 1, 2009. The financial information also includes adjustments to eliminate any intercompany transactions.

The pro forma information is provided for informational purposes only. The pro forma information does not necessarily represent results that would have occurred if the amalgamation with Harbor Point had occurred on January 1, 2009, nor is it necessarily indicative of future results.

ALTERRA CAPITAL HOLDINGS LIMITED

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

(Expressed in thousands of United States Dollars)


	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	%
Acquisition cost ratio [b]		1.6	%		20.9	%		15.2	%		17.9	%		16.0	%
General and administrative expense ratio [c]		13.1	%		10.5	%		19.3	%		21.2	%		13.6	%

Combined ratio		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 for the property & casualty business

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business

[d]	Includes the results for Harbor Point from May 12, 2010.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED UNDERWRITING RATIOS - YEAR ENDED DECEMBER 31, 2010 (Unaudited)


	Property & Casualty
	Insurance			Reinsurance [b]			U.S. Specialty			Alterra at Lloyd’s			Total

UNDERWRITING RATIOS

Loss ratio		58.9	%		55.4	%		63.4	%		44.3	%		56.1	%
Acquisition cost ratio		1.6	%		20.9	%		15.2	%		17.9	%		16.0	%
General and administrative expense ratio		13.1	%		10.5	%		19.3	%		21.2	%		13.6	%

Combined ratio		73.6	%		86.8	%		97.9	%		83.4	%		85.7	%


EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)

Loss ratio [a]		20.7	%		7.1	%		0.4	%		11.1	%		9.0	%


NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS

Loss ratio		79.6	%		62.5	%		63.8	%		55.4	%		65.1	%
Acquisition cost ratio		1.6	%		20.9	%		15.2	%		17.9	%		16.0	%
General and administrative expense ratio		13.1	%		10.5	%		19.3	%		21.2	%		13.6	%

Combined ratio		94.3	%		93.9	%		98.3	%		94.5	%		94.7	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

[b]	Includes the results for Harbor Point from May 12, 2010.

CONSOLIDATED UNDERWRITING RATIOS - YEAR ENDED DECEMBER 31, 2009 (Unaudited)


	Property & Casualty
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Historical Harbor Point [c]

UNDERWRITING RATIOS

Loss ratio		64.3	%		65.6	%		61.5	%		46.2	%		62.4	%		44.3	%
Acquisition cost ratio		(0.6	%)		18.3	%		7.3	%		19.1	%		12.1	%		21.5	%
General and administrative expense ratio		11.9	%		8.2	%		30.7	%		21.0	%		13.6	%		9.5	%

Combined ratio		75.6	%		92.1	%		99.5	%		86.3	%		88.1	%		75.3	%


EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)

Loss ratio [a]		20.0	%		8.3	%		(1.1	%)		6.5	%		9.9	%		4.7	%


NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS

Loss ratio		84.3	%		73.9	%		60.4	%		52.7	%		72.3	%		49.0	%
Acquisition cost ratio		(0.6	%)		18.3	%		7.3	%		19.1	%		12.1	%		21.5	%
General and administrative expense ratio		11.9	%		8.2	%		30.7	%		21.0	%		13.6	%		9.5	%

Combined ratio		95.6	%		100.4	%		98.4	%		92.8	%		98.0	%		80.0	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

[c]	Provided for informational purposes only.

ALTERRA CAPITAL HOLDINGS LIMITED

INSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	370,120		$	427,767		$	389,368
Reinsurance premiums ceded		(170,608	)		(212,083	)		(198,098	)

Net premiums written	$	199,512		$	215,684		$	191,270


Earned premiums	$	391,716		$	417,090		$	371,080
Earned premiums ceded		(173,123	)		(211,127	)		(189,125	)

Net premiums earned		218,593			205,963			181,955

Net investment income		25,134			22,875			18,437
Net realized and unrealized gains (losses) on investments		618			4,430			(23,499	)
Other income		760			1,238			1,112


Total revenues		245,105			234,506			178,005

Net losses and loss expenses		128,823			132,355			142,150
Acquisition costs		3,381			(1,233	)		(2,810	)
Interest expense		970			781			—
General and administrative expenses		28,615			24,623			21,101

Total losses and expenses		161,789			156,526			160,441


Income before taxes	$	83,316		$	77,980		$	17,564


Loss ratio		58.9	%		64.3	%		78.1	%
Acquisition cost ratio		1.6	%		(0.6	%)		(1.5	%)
General and administration expense ratio		13.1	%		11.9	%		11.6	%

Combined ratio		73.6	%		75.6	%		88.2	%

ALTERRA CAPITAL HOLDINGS LIMITED

REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	509,053		$	489,028		$	419,509
Reinsurance premiums ceded		(64,131	)		(80,005	)		(92,421	)

Net premiums written	$	444,922		$	409,023		$	327,088


Earned premiums	$	699,243		$	476,434		$	426,157
Earned premiums ceded		(71,627	)		(88,578	)		(84,366	)

Net premiums earned		627,616			387,856			341,791

Net investment income		60,072			40,220			36,069
Net realized and unrealized gains (losses) on investments		694			10,540			(51,096	)
Other income		—			12			—


Total revenues		688,382			438,628			326,764

Net losses and loss expenses		347,816			254,474			218,749
Acquisition costs		131,114			71,074			51,328
Interest expense		6,988			6,591			7,516
Net foreign exchange losses		1,696			—			—
General and administrative expenses		66,073			31,778			28,548

Total losses and expenses		553,687			363,917			306,141


Income before taxes	$	134,695		$	74,711		$	20,623


Loss ratio		55.4	%		65.6	%		64.0	%
Acquisition cost ratio		20.9	%		18.3	%		15.0	%
General and administration expense ratio		10.5	%		8.2	%		8.4	%

Combined ratio		86.8	%		92.1	%		87.4	%

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

ALTERRA CAPITAL HOLDINGS LIMITED

U.S. SPECIALTY SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	323,990		$	285,478		$	194,353
Reinsurance premiums ceded		(98,576	)		(155,096	)		(118,710	)

Net premiums written	$	225,414		$	130,382		$	75,643


Earned premiums	$	311,950		$	256,670		$	121,172
Earned premiums ceded		(125,218	)		(154,568	)		(77,374	)

Net premiums earned		186,732			102,102			43,798

Net investment income		5,233			5,987			7,235
Net realized and unrealized gains (losses) on investments		29			232			(523	)
Other income		507			314			303


Total revenues		192,501			108,635			50,813

Net losses and loss expenses		118,337			62,812			30,376
Acquisition costs		28,444			7,501			3,039
General and administrative expenses		36,015			31,229			27,235

Total losses and expenses		182,796			101,542			60,650


Income (loss) before taxes	$	9,705		$	7,093		$	(9,837	)


Loss ratio		63.4	%		61.5	%		69.4	%
Acquisition cost ratio		15.2	%		7.3	%		6.9	%
General and administration expense ratio		19.3	%		30.7	%		62.2	%

Combined ratio		97.9	%		99.5	%		138.5	%

ALTERRA CAPITAL HOLDINGS LIMITED

ALTERRA AT LLOYD’S SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008 [a]

Gross premiums written	$	202,633		$	128,973		$	8,844
Reinsurance premiums ceded		(37,448	)		(32,884	)		(4,294	)

Net premiums written	$	165,185		$	96,089		$	4,550


Earned premiums	$	170,803		$	125,000		$	9,663
Earned premiums ceded		(35,793	)		(29,907	)		(5,349	)

Net premiums earned		135,010			95,093			4,314

Net investment income		11,554			4,388			542
Net realized and unrealized (losses) gains on investments		(4,476	)		2,590			508
Other income		2,534			658			160


Total revenues		144,622			102,729			5,524

Net losses and loss expenses		59,865			43,958			2,470
Acquisition costs		24,164			18,136			981
Net foreign exchange gains		(1,737	)		(5,055	)		(382	)
General and administrative expenses		28,531			19,972			2,525

Total losses and expenses		110,823			77,011			5,594


Income (loss) before taxes	$	33,799		$	25,718		$	(70	)


Loss ratio		44.3	%		46.2	%		57.3	%
Acquisition cost ratio		17.9	%		19.1	%		22.7	%
General and administration expense ratio		21.2	%		21.0	%		58.5	%

Combined ratio		83.4	%		86.3	%		138.5	%

[a]	Includes the results for Alterra at Lloyd’s from November 6, 2008.

ALTERRA CAPITAL HOLDINGS LIMITED

LIFE AND ANNUITY REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Gross premiums written	$	4,935		$	43,755		$	242,176

Reinsurance premiums ceded		(400	)		(413	)		(524	)

Net premiums written	$	4,535		$	43,342		$	241,652


Earned premiums	$	4,935		$	43,755		$	242,176
Earned premiums ceded		(400	)		(413	)		(524	)

Net premiums earned		4,535			43,342			241,652

Net investment income		49,785			50,993			40,058
Net realized and unrealized gains (losses) on investments		11,358			37,338			(100,921	)
Other income		286			(120	)		—


Total revenues		65,964			131,553			180,789

Claims and policy benefits		65,213			101,093			301,526
Acquisition costs		361			1,396			(159	)
Interest expense		5,849			3,328			6,818
General and administrative expenses		2,964			2,786			2,917

Total losses and expenses		74,387			108,603			311,102


(Loss) income before taxes	$	(8,423	)	$	22,950		$	(130,313	)

ALTERRA CAPITAL HOLDINGS LIMITED

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS (Unaudited)

(Expressed in thousands of United States Dollars)


Gross Premiums Written by Type of Risk:		FOR THE YEARS ENDED
		Dec. 31, 2010		Dec. 31, 2009		Dec. 31, 2008
Property & Casualty:
Insurance:
Aviation	S	$	39,888	$	69,834	$	53,034
Excess Liability	L		89,933		113,767		123,490
Professional Liability	L		177,199		179,904		159,140
Property	S		63,100		64,262		53,704

			370,120		427,767		389,368

Reinsurance [a]:
Agriculture	S		29,222		89,550		80,454
Auto	S		32,902		—		—
Aviation	S		31,292		34,715		31,555
Credit/ Surety	S		2,196		—		—
General Casualty	L		48,357		29,185		10,165
Marine & Energy	S		16,381		18,321		12,769
Medical Malpractice	L		51,391		67,483		77,133
Other	S		2,784		2,297		1,934
Professional Liability	L		110,427		71,531		38,718
Property	S		148,146		87,039		99,280
Whole Account	S/L		5,129		11,456		12,906
Workers’ Compensation	L		30,826		77,451		54,595

			509,053		489,028		419,509

U.S. Specialty:
General Liability	L		104,777		87,782		59,838
Marine	S		67,454		61,360		38,667
Professional Liability	L		12,454		576		—
Property	S		139,305		135,760		95,848

			323,990		285,478		194,353

Alterra at Lloyd’s [b]:
Accident & Health	S		30,921		22,602		408
Aviation	S		16,138		2,611		—
Financial Institutions	L		19,448		23,822		4,062
International Casualty	L		26,174		—		—
Professional Liability	L		19,591		19,889		2,928
Property	S		85,553		60,049		1,446
Surety	S		4,808		—		—

			202,633		128,973		8,844


Aggregate Property & Casualty		$	1,405,796	$	1,331,246	$	1,012,074


Life & Annuity:
Annuity		$	1,135	$	—	$	239,555
Life			3,800		43,755		2,621


Aggregate Life & Annuity			4,935		43,755		242,176

Aggregate Property & Casualty and Life & Annuity		$	1,410,731	$	1,375,001	$	1,254,250

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

[b]	Includes the results for Alterra at Lloyd’s from November 6, 2008.


S = Short tail lines	$	712,655	$	654,128	$	475,552
L = Long tail lines		693,141		677,118		536,522

Aggregate Property & Casualty	$	1,405,796	$	1,331,246	$	1,012,074

ALTERRA CAPITAL HOLDINGS LIMITED

AMALGAMATION WITH HARBOR POINT (Unaudited)

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


Number of Harbor Point common shares (including unvested restricted Harbor Point common shares) outstanding at May 12, 2010			16,542,489

Exchange ratio			3.7769
Total Alterra common shares issued [a]			62,479,281
Closing price of Alterra common shares on May 12, 2010		$	22.98


Purchase price before adjustments for stock based compensation			1,435,774
Fair value of Harbor Point options and Harbor Point warrants outstanding at May 12, 2010			74,278
Unrecognized compensation on unvested Harbor Point options and restricted Harbor Point common shares			(28,265	)

Total purchase price		$	1,481,787


Fair value of assets acquired:
Cash and investments	2,662,968
Net premiums receivables	354,496
Other assets	30,149

Tangible assets acquired			3,047,613

Fair value of intangible assets			12,200

Fair value of liabilities acquired:
Net loss reserves	836,677
Net unearned premiums	370,500
Other liabilities	275,061


Liabilities acquired			1,482,238


Negative goodwill gain		$	95,788

[a]	Adjusted for rounding

ALTERRA CAPITAL HOLDINGS LIMITED

INVESTMENT PORTFOLIO (Unaudited)

(Expressed in thousands of United States Dollars)


	Carrying Value										Fair Value
Type of Investment	As of Dec. 31, 2010		Investment Distribution			As of Dec. 31, 2009		Investment Distribution			As of Dec. 31, 2010		Investment Distribution			As of Dec. 31, 2009		Investment Distribution

Cash and cash equivalents	$	905,606		11.5	%	$	702,278		13.4	%	$	905,606		11.4	%	$	702,278		13.3	%


U.S. government and agencies		995,546		12.7	%		525,427		10.0	%		995,546		12.5	%		525,427		9.9	%
Non-U.S. governments		79,111		1.0	%		82,027		1.5	%		79,111		1.0	%		82,027		1.6	%
Corporate securities		2,735,366		34.8	%		1,375,999		26.2	%		2,735,366		34.5	%		1,375,999		26.0	%
Municipal securities		238,014		3.0	%		83,658		1.6	%		238,014		3.0	%		83,658		1.6	%
Asset-backed securities		86,937		1.1	%		102,006		1.9	%		86,937		1.1	%		102,006		1.9	%
Residential mortgage-backed securities		1,168,390		14.9	%		763,974		14.5	%		1,168,390		14.7	%		763,974		14.4	%
Commercial mortgage-backed securities		334,151		4.3	%		302,961		5.8	%		334,151		4.2	%		302,961		5.7	%


Fixed maturities carried at fair value	$	5,637,515		71.7	%	$	3,236,052		61.5	%	$	5,637,515		71.0	%	$	3,236,052		61.2	%


Other investments carried at fair value	$	378,128		4.8	%	$	318,073		6.0	%	$	380,668		4.8	%	$	318,073		6.0	%


Total investments carried at fair value	$	6,921,249		88.0	%	$	4,256,403		80.9	%	$	6,923,789		87.2	%	$	4,256,403		80.5	%


U.S. government and agencies	$	29,687		0.4	%	$	14,050		0.3	%	$	30,200		0.4	%	$	13,535		0.3	%
Non-U.S. governments		538,274		6.8	%		573,250		10.9	%		587,053		7.4	%		584,284		11.0	%
Corporate securities		371,143		4.7	%		418,647		7.9	%		397,261		5.0	%		435,732		8.2	%
Asset-backed securities		1,000		0.0	%		—		—			998		0.0	%		—		—


Fixed maturities carried at amortized cost	$	940,104		12.0	%	$	1,005,947		19.1	%	$	1,015,512		12.8	%	$	1,033,551		19.5	%


Total invested assets	$	7,861,353		100.0	%	$	5,262,350		100.0	%	$	7,939,301		100.0	%	$	5,289,954		100.0	%

As of December 31, 2010, the weighted average book yield of the cash and fixed maturities portfolio was 3.21%, and the weighted average duration was 4.2 years.


Credit Ratings	As of Dec. 31, 2010		Ratings Distribution			As of Dec. 31, 2009		Ratings Distribution			As of Dec. 31, 2010		Ratings Distribution			As of Dec. 31, 2009		Ratings Distribution

U.S. government and agencies [a]	$	2,060,116		31.3	%	$	1,214,895		28.6	%	$	2,060,116		31.0	%	$	1,214,895		28.5	%
AAA		1,076,680		16.4	%		720,364		17.0	%		1,076,680		16.2	%		720,364		16.9	%
AA		657,867		10.0	%		325,997		7.7	%		657,867		9.9	%		325,997		7.6	%
A		1,353,945		20.6	%		731,723		17.2	%		1,353,945		20.4	%		731,723		17.1	%
BBB		226,849		3.4	%		100,841		2.4	%		226,849		3.4	%		100,841		2.4	%
BB		32,021		0.5	%		34,781		0.8	%		32,021		0.5	%		34,781		0.8	%
B or lower		230,037		3.5	%		107,451		2.5	%		230,037		3.5	%		107,451		2.5	%


Fixed maturities carried at fair value	$	5,637,515		85.7	%	$	3,236,052		76.3	%	$	5,637,515		84.7	%	$	3,236,052		75.8	%

U.S. government and agencies		29,687		0.5	%		14,050		0.3	%		30,200		0.5	%		13,535		0.3	%
AAA		641,437		9.8	%		717,954		16.9	%		699,598		10.5	%		734,595		17.2	%
AA		113,140		1.7	%		101,675		2.4	%		118,276		1.8	%		105,296		2.5	%
A		141,683		2.2	%		158,141		3.7	%		151,127		2.3	%		165,172		3.9	%
BBB		12,744		0.2	%		12,672		0.3	%		14,764		0.2	%		13,478		0.3	%
BB		—		—			—		—			—		—			—		—
B or lower		1,413		0.0	%		1,455		0.1	%		1,547		0.0	%		1,475		0.0	%

Fixed maturities carried at amortized cost	$	940,104		14.3	%	$	1,005,947		23.7	%	$	1,015,512		15.3	%	$	1,033,551		24.2	%


Total fixed maturities	$	6,577,619		100.0	%	$	4,241,999		100.0	%	$	6,653,027		100.0	%	$	4,269,603		100.0	%

[a]	Included within US 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.


	Quarter Ended Dec. 31, 2010			Quarter Ended Sept. 30, 2010			Quarter Ended June 30, 2010			Quarter Ended Mar. 31, 2010			Quarter Ended Dec. 31, 2009			Quarter Ended Dec. 31, 2008
Net investment income	$	61,080		$	59,711		$	53,277		$	48,390		$	44,668		$	44,226


Realized and unrealized (losses) gains on trading fixed maturities		(3,893	)		883			(1,284	)		(182	)		3			508
Net realized gains (losses) on available for sale fixed maturities		5,816			6,395			2,425			838			3,234			(1,456	)
Change in fair value of hedge funds		5,465			4,820			(3,323	)		7,370			13,555			(87,933	)
Change in fair value of non-hedge fund other investments		2,437			3,313			(12,604	)		(1,604	)		533			(70	)

Net realized and unrealized gains (losses) on investments	$	9,825		$	15,411		$	(14,786	)	$	6,422		$	17,325		$	(88,951	)


Net impairment losses recognized in earnings	$	(1,774	)	$	(151	)	$	(300	)	$	(420	)	$	(925	)	$	—

ALTERRA CAPITAL HOLDINGS LIMITED

INVESTMENT PORTFOLIO (Unaudited)

(Expressed in thousands of United States Dollars)


										Periodic Rate of Return
				As of						Last 3 Months			Year to Date			Last 12 months			Last 60 months*
				Dec. 31, 2010

Cash and fixed maturities				$	7,483,225						(1.37	%)		5.51	%		5.51	%		4.89	%


Convertible arbitrage				$	—						0.00	%		0.00	%		0.00	%		0.48	%
Distressed securities					35,815						2.64	%		7.60	%		7.60	%		7.07	%
Diversified arbitrage					27,892						6.12	%		13.65	%		13.65	%		(1.99	%)
Emerging markets					13,044						2.07	%		5.85	%		5.85	%		5.37	%
Event-driven arbitrage					30,175						1.61	%		(5.85	%)		(5.85	%)		4.34	%
Fixed income arbitrage					—						0.00	%		1.53	%		1.53	%		15.37	%
Fund of funds					42,849						3.06	%		4.61	%		4.61	%		0.91	%
Global macro					49,700						1.82	%		8.14	%		8.14	%		5.86	%
Long / short credit					10,037						2.24	%		6.49	%		6.49	%		5.90	%
Long / short equity					82,065						1.53	%		4.44	%		4.44	%		5.61	%
Opportunistic					2,680						(0.02	%)		(3.07	%)		(3.07	%)		(10.34	%)


Hedge funds **					294,257						1.57	%		4.27	%		4.27	%		3.22	%

Catastrophe bonds					47,248
Derivatives					4,356
Structured deposits					26,809
Equity investments					5,458


Other investments				$	378,128


Total invested assets				$	7,861,353


Hedge Fund Investment Return Data:

HFRI Fund of Funds Composite Index [a]											3.59	%		5.67	%		5.67	%		2.43	%

Hedge Fund Performance History – 60 months ended December 31, 2010

Monthly performance	2010			2009			2008			2007			2006
January		0.79	%		2.13	%		(1.37	%)		1.28	%		2.75	%
February		0.17	%		0.65	%		1.83	%		1.50	%		0.39	%
March		1.02	%		(0.76	%)		(2.58	%)		1.90	%		1.22	%
April		0.88	%		(0.84	%)		(0.13	%)		2.30	%		1.89	%
May		(0.73	%)		2.45	%		2.51	%		2.59	%		(1.74	%)
June		(0.83	%)		1.53	%		0.93	%		0.85	%		(0.66	%)
July		0.36	%		1.40	%		(4.12	%)		0.99	%		(0.71	%)
August		(0.28	%)		0.78	%		(2.14	%)		(1.62	%)		0.02	%
September		1.28	%		1.71	%		(7.31	%)		1.85	%		(2.04	%)
October		0.81	%		1.53	%		(4.85	%)		4.15	%		1.37	%
November		0.45	%		0.35	%		(1.75	%)		0.10	%		1.81	%
December		0.30	%		0.77	%		(1.92	%)		(0.13	%)		1.96	%

Quarterly performance
Q1		1.99	%		2.00	%		(2.15	%)		4.75	%		4.41	%
Q2		(0.69	%)		3.14	%		3.33	%		5.83	%		(0.54	%)
Q3		1.35	%		3.94	%		(13.03	%)		1.18	%		(2.72	%)
Q4		1.57	%		2.66	%		(8.31	%)		4.11	%		5.22	%

Period return		4.27	%		12.27	%		(19.38	%)		16.78	%		6.30	%

Past performance should not be considered to be a reliable indicator of future performance.

[a]	As reported by HFRI as of February 3, 2011

*	Annualized

**	Net of all fees

ALTERRA CAPITAL HOLDINGS LIMITED

LARGEST 25 CORPORATE HOLDINGS (Unaudited)

(Expressed in thousands of United States Dollars)


	As of Dec. 31, 2010
	Amortized		Fair
Issuer	Cost		Value

JP Morgan Chase & Co		69,845		71,806
European Investment Bank		57,260		61,547
General Electric		58,730		59,975
Wells Fargo & Co		54,547		55,526
Lloyds Banking Group Plc		52,176		53,020
Bank of America Corp		51,324		51,837
Kreditanstalt Fuer Wiederaufbau		46,753		50,001
Morgan Stanley		46,346		47,778
Goldman Sachs Group Inc		43,194		43,851
Novartis AG		38,334		39,542
Verizon Communications Inc		37,314		38,758
Credit Suisse Group		38,011		38,505
Pfizer Inc		34,991		36,321
Citigroup Inc		36,595		36,283
BP plc		34,552		34,977
AT&T Inc		33,024		33,751
Pepsico Inc		32,045		33,193
UBS AG		27,246		29,567
Roche Holdings AG		26,983		28,481
Metlife Inc		26,391		27,251
Berkshire Hathaway Inc		24,288		24,921
HSBC Holdings Plc		24,416		24,912
Wal-Mart Stores Inc		23,533		23,965
Network Rail Ltd		22,446		23,832
Conoco Philips		21,829		23,145


	$	962,173	$	992,745

ALTERRA CAPITAL HOLDINGS LIMITED

SHAREHOLDER RETURN ANALYSIS (Unaudited)

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


	FOR THE QUARTERS ENDED						FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2008

Income and Return on Equity:
Net income (loss)	$	79,670		$	62,592		$	302,335		$	246,215		$	(175,318	)

Net operating income (loss)	$	76,216		$	60,474		$	251,712		$	208,907		$	(143,752	)

Average shareholders’ equity	$	2,977,404		$	1,555,654		$	2,467,429		$	1,398,872		$	1,426,927

Annualized return on average shareholders’ equity [a]		10.7	%		16.1	%		12.3	%		17.6	%		(12.3	%)
Annualized net operating return on average shareholders’ equity [a]		10.2	%		15.5	%		10.2	%		14.9	%		(10.1	%)

Book value and dividends per share:

Diluted book value per share							$	25.99		$	27.36		$	22.46

Dividends paid per share							$	2.94		$	0.38		$	0.36

Change in diluted book value per share								(5.0	%)		21.8	%		(12.2	%)

Dividend payout ratio [b]								22.4	%		1.7	%		1.3	%

Total return to shareholders [c]								17.4	%		23.5	%		(10.9	%)

[a]

Annualized return on average shareholders’ equity is defined as annualized net income divided by the average of the quarterly average shareholders’ equity balances. Annualized net operating return on average shareholders’ equity is defined as annualized net operating income divided by the average of the quarterly average shareholders’ equity balances. The average shareholders’ equity for the year ended December 31, 2010 has been weighted to include Harbor Point from May 12, 2010.

[b]	Dividend payout ratio is calculated as dividends paid divided by beginning shareholders’ equity.

[c]	Total return to shareholders is calculated as the change in diluted book value per share plus the dividend payout ratio.

ALTERRA CAPITAL HOLDINGS LIMITED

EARNINGS PER SHARE INFORMATION (Unaudited)

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


	FOR THE QUARTERS ENDED				FOR THE YEARS ENDED
	Dec. 31, 2010		Dec. 31, 2009		Dec. 31, 2010		Dec. 31, 2009

Net income available to common shareholders	$	79,670	$	62,592	$	302,335	$	246,215

Denominator:
Weighted average shares - basic
Outstanding [a]		113,807,820		56,687,373		94,426,055		56,615,080
Unvested restricted share units		160,467		403,557		256,224		391,828

		113,968,287		57,090,930		94,682,279		57,006,908

Share equivalents:
Warrants		600,014		720,029		537,399		608,161
Options		150,375		220,437		183,258		150,669
Employee stock purchase plan		4,514		4,379		2,301		1,399
Non participating restricted shares		108,277		—		54,138		—


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


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


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

[a]	Includes weighted average unvested participating restricted shares

[b]	Computed using the treasury method. The treasury method assumes that the proceeds received from the exercise of options or warrants will be used to repurchase the Company’s common shares at the average market price during the period of calculation.

ALTERRA CAPITAL HOLDINGS LIMITED

OPERATING INCOME RECONCILIATION (Unaudited)

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


	FOR THE QUARTERS ENDED						FOR THE YEARS ENDED
	Dec. 31, 2010			Dec. 31, 2009			Dec. 31, 2010			Dec. 31, 2009
Before Tax
Net income	$	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		76,134			66,015			257,665			216,725


Net of tax
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


Weighted average shares outstanding:
Basic		113,968,287			57,090,930			94,682,279			57,006,908
Diluted		114,831,467			58,035,775			95,459,375			57,767,137

Basic per share data
Earnings per share	$	0.70		$	1.10		$	3.19		$	4.32
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			(0.08	)
Merger and acquisition expenses, net of tax		—			—			(0.53	)		(0.56	)

Net operating income per share	$	0.67		$	1.06		$	2.66		$	3.66


Diluted per share data
Diluted earnings per 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

[a]

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

ALTERRA CAPITAL HOLDINGS LIMITED

BOOK VALUE PER SHARE (Unaudited)

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


	As of Dec. 31, 2010		As of Dec. 31, 2009

Price per share at period end	$	21.64	$	22.30

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

Basic common shares outstanding [a]		110,963,160		55,867,125

Add: unvested restricted stock units		167,971		406,514

Add: dilutive impact of warrants outstanding		1,036,442		683,163

Add: dilutive impact of options outstanding		123,395		221,656


Diluted shares outstanding [b]		112,290,968		57,178,458

Basic book value per share	$	26.30	$	28.01
Diluted book value per share	$	25.99	$	27.36

Basic tangible book value per share	$	25.77	$	27.13
Diluted tangible book value per share	$	25.46	$	26.51

[a]	Includes unvested restricted shares

[b]	Computed using the treasury method. The treasury method assumes that the proceeds received from the exercise of options or warrants will be used to repurchase the Company’s common shares at the period-end market price.

ALTERRA CAPITAL HOLDINGS LIMITED

REGULATION G

In presenting the Company’s results, management has included and discussed net operating income, net operating income per share, net operating income per diluted share, annualized net operating return on average shareholders’ equity, tangible book value per share 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 the Company’s business. These measures, however, should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The reconciliation of such measures to their respective most directly comparable U.S. GAAP financial measures is presented in the attached financial information in accordance with Regulation G.

Net operating income is defined as net income excluding after-tax net realized and unrealized gains or losses on non- hedge fund investments (this includes net realized and unrealized gains or losses on trading securities, net realized gains or losses on available for sale securities, net impairment losses recognized in earnings, changes in fair value of investment derivatives, catastrophe bonds, structured deposits and earnings from equity method investments), after-tax net foreign exchange gains or losses and after-tax merger and acquisition expenses. Net operating income per share and per diluted share is defined as the net operating income divided by the weighted average common shares or weighted average diluted common shares, respectively. We believe that this non-GAAP measure provides a better indication of management performance as realized and unrealized gains and losses on fixed maturities may fluctuate from period to period and foreign exchange gains and losses are typically outside the control of management. Merger and acquisition expenses are not indicative of expenses fundamental to the business and may fluctuate from period to period.

Annualized net operating return on average shareholders’ equity is defined as annualized net operating income divided by the average of the beginning and ending shareholders’ equity. Tangible book value is defined as shareholders’ equity excluding goodwill and intangible assets. Tangible book value per share and diluted tangible book value per share is defined as the tangible book value divided by the common shares outstanding or diluted common shares outstanding, respectively. These non-GAAP measures allow management to assess how the Company has performed in terms of wealth generated for its shareholders.

ALTERRA CAPITAL HOLDINGS LIMITED

Pro Forma Combined - Alterra Capital Holdings Limited and Harbor Point Limited

Selected Financial Information

The following presentation is for informational purposes only

ALTERRA CAPITAL HOLDINGS LIMITED

PRO FORMA COMBINED STATEMENTS OF INCOME [a] (unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Sept. 30, 2009			June 30, 2009			Mar. 31, 2009

REVENUES
Gross premiums written	$	476,550		$	676,905		$	337,048		$	382,650		$	564,251		$	662,432
Reinsurance premiums ceded		(81,333	)		(159,515	)		(81,627	)		(73,703	)		(126,503	)		(168,155	)

Net premiums written	$	395,217		$	517,390		$	255,421		$	308,947		$	437,748		$	494,277


Net premiums earned	$	368,061		$	338,332		$	347,833		$	351,245		$	366,130		$	317,598

Net investment income		61,562			64,583			60,668			60,068			59,636			58,943
Net realized and unrealized (losses) gains on investments		(13,734	)		13,280			18,004			29,622			22,462			20,722
Net impairment losses recognized in earnings		(300	)		(420	)		(925	)		(139	)		(2,014	)		—
Net realized gain on retirement of senior notes		—			—			111			—			—			—
Other income		339			480			189			964			1,193			1,799


Total revenues		415,928			416,255			425,880			441,760			447,407			399,062


LOSSES AND EXPENSES
Net losses and loss expenses		213,517			210,543			166,573			181,064			186,301			178,130
Claims and policy benefits		13,943			17,659			16,976			14,378			55,407			14,332
Acquisition costs		64,315			53,998			54,042			59,613			53,317			47,611
Interest expense		8,061			5,226			6,978			6,292			5,146			4,351
Net foreign exchange (gains) losses		(1,622	)		(869	)		789			(116	)		(5,571	)		(1,911	)
Merger and acquisition expenses		—			—			—			(41,350	)		4,785			5,223
General and administrative expenses		60,137			51,611			66,157			57,048			53,979			57,508


Total losses and expenses		358,351			338,168			311,515			276,929			353,364			305,244


INCOME BEFORE TAXES		57,577			78,087			114,365			164,831			94,043			93,818

Income tax expense		4,294			1,311			5,686			2,910			3,206			1,990


NET INCOME		53,283			76,776			108,679			161,921			90,837			91,828

[a]

The information presented above is on a combined pro forma basis (after the elimination of intercompany transactions and the amortization of certain acquisition accounting fair value adjustments). The pro forma financial information is provided for informational purposes only, to present a summary of the combined results of operations assuming the amalgamation with Harbor Point had occurred at the beginning of each calendar year presented. The pro forma data does not necessarily represent results that would have occurred if the amalgamation had taken place at the beginning of each calendar year presented, nor is it necessarily indicative of the future results.

ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT FOR THE QUARTER ENDED DECEMBER 31, 2010. - February 8, 2011

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