ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - SLIDES FROM PRESENTATION BY MANAGEMENT

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8-K - FORM 8-K - ALTERRA CAPITAL HOLDINGS Ltd	d8k.htm

Investor Presentation

Quarter Ended March 31, 2011

Exhibit 99.1

Cautionary Note Regarding Forward-Looking Statements

Alterra was formed on May 12, 2010 by the merger of Max Capital Group Ltd. (“Max Capital”) and Harbor Point Limited

(“Harbor Point”). This presentation 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 and benefit 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; and (13) the integration of new business ventures Alterra may

enter into; as well as 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 Securities and Exchange

Commission. Any forward-looking statements made in this presentation 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’s Franchise is Well Positioned For Success

Global underwriter of specialty insurance and reinsurance

Multiple

operating

platforms

Bermuda,

Ireland,

United

States, Lloyd's, Latin America

Strong franchise position across multiple specialty classes

of business

Opportunistic and disciplined underwriting strategy

Strong culture of risk management

Analytical and quantitative underwriting orientation

5 year average combined ratio including cats of 87.7%

Strong, liquid balance sheet with conservative reserving track

record

Shareholders’

equity ~ $2.7 billion at 3/31/11

Low operating and financial leverage enhances flexibility

Proven track record of active capital management

Q1 repurchases of $137.1 million

Returned $559 million or ~18% of pro forma 12/31/09

shareholders' equity

(1)

in 2010 through dividends and

share repurchases

Rated “A”

(Excellent) by AM Best

(3)

____________________

(1)

Shareholders' equity of Max Capital and Harbor Point on a combined pro forma basis.

(2)

Pro

forma

gross

premiums

written

the

amalgamation

occurred

January

2010.

(3)

AM Best ratings reflect the agency’s opinion of our financial strength, operating performance and ability to meet our obligations. The ratings are not directed toward

the protection of investors in securities of Alterra.

2010 GPW

(2)

First Quarter Results

Q1 2011 net operating loss of $0.23 per share

P&C gross premiums written grew 69.4% to $627.4 million, down 7% on a pro forma

basis

(1)

Driven by the inclusion of Harbor Point, new business in Latin America and expansion at

Lloyd’s

Net investment income up 19.4% to $57.8 million

Reflects additional cash and invested assets from inclusion of Harbor Point

Q1 combined ratio of 112.5%

Catastrophe losses from Q1 events of $115.5 million ($106.3 million net of

reinstatements) or 28.3 points on the combined ratio

Diluted book value per share of $25.34 at 3/31/11, down 2.5% from 12/31/2010

(1) Pro forma gross premiums written as if the amalagamation occurred January 1, 2010.

Impacted by Catastrophe Events But Capital Remains Strong

Solid 2010 Year Results

Full Year 2010 net operating diluted

EPS of $2.64 per share

Decrease from 2009 principally due to

increased outstanding shares from

Harbor Point merger

P&C gross premiums written grew

5.6% to $1,405.8 million

Driven by the inclusion of Harbor Point,

new business in Latin America, and

expansion at Lloyd’s and U.S.

Specialty

Net investment income up 31.1% to

$222.5 million

Reflects additional cash and invested

assets from inclusion of Harbor Point

Combined ratio of 85.7%

Catastrophe losses from 2010 events

of $54.9 million

Diluted book value per share of $25.99

at 12/31/10

P&C GPW

(5.6% increase)

Operating

Diluted EPS

Growth in Gross Premiums Written…

…With Solid Operating EPS

Operating ROE

14.9%

10.2%

Combined ratio

88.1%

85.7%

= pro forma gross premiums written as of the amalgamation occurred on January 1, 2009

$1,902.6

$1,789.1

2009

2010

$1,331.2

$1,405.8

$3.62

$2.64

2009

2010

Getting Closer To An Inflection Point

First quarter global industry cat losses estimated ~ $50 billion

Industry is stressed by historic low returns on invested assets

Profitable growth opportunities have been difficult to identify

Cash flow levels have deteriorated for many market participants

Reserve redundancies at many market participants have diminished

Share repurchase activity slowed due to high cat losses

International property cat markets have improved

Pricing poised to further move with the next catalyst

Alterra is strongly positioned to be a primary beneficiary of improving

market conditions globally

2004

Insurance

Property

2003

Insurance

Excess Liability

Professional Liability

2005

Reinsurance

Property / Property Cat

Harbor Point formed

2006

Insurance

Aviation

2008

Lloyd's Insurance

Financial Institutions

Prof. Indemnity

Lloyd's Reinsurance

Accident / Health

Property

2007

U.S. E&S Insurance

Property

Inland Marine

U.S. Casualty

Reinsurance

Multi Peril Crop

2009

Lloyd's

Casualty (non U.S.)

A&H Insurance

U.S. Specialty

Professional Liability

Latin America Reinsurance

2002

Traditional Re

Workers' Comp

Medical Malpractice

GL / PL

Aviation

Identifying & Recruiting "Franchise Players" Has Been

Instrumental In Our Success

2010

Alterra formed

by the merger of Max

Capital and Harbor Point

2011

Lloyd’s

Property Direct

&Facultative

U.S. Specialty

Excess Casualty

Experienced &

highly quantitative

underwriting teams

Lead underwriters average over 20 years in the

business

High percentage of employees hold

professional designations

How We Built Alterra

The Expansion of our Employee Base Generated our Growth in Premiums

Presented on a pro forma basis as if the merger with Harbor Point was completed on January 1, 2006

600

500

400

300

200

100

2,500

2,000

1,500

1,000

500

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011 (E)

Gross Premiums Written (Traditional P&C only)

Employees

Locations

Countries

Reinsurance

Insurance

Lloyd’s

U.S. Specialty Insurance

Major Classes

–

Agriculture

–

Auto

–

Aviation

–

Credit, surety and political risk

–

General casualty

–

Life and annuity

–

Marine and energy

–

Medical malpractice

–

Professional liability

–

Property

–

Whole account

–

Workers’ comp

–

Aviation

–

Excess liability

–

Professional liability

–

Property

–

Accident & health Insurance

–

Aviation

–

Financial institutions

–

International casualty treaty

–

Marine and cargo

–

Personal accident treaty

–

Professional liability

–

Property treaty

–

Property direct and facultative

–

Surety

–

General liability

–

Marine

–

Professional liability

–

Property

Operating

Regions

–

Australia

–

Canada

–

European Union

–

Japan

–

Latin America

–

New Zealand

–

United States

–

European Union

–

United States

–

Denmark

–

Japan

–

Latin America

–

United Kingdom

–

United States

Offices

–

Bermuda

–

Bogotá

–

Buenos Aires

–

Dublin

–

London

–

New Jersey

–

Bermuda

–

Dublin

–

Hamburg

–

New York

–

Sebastopol, CA

–

Zurich

–

Copenhagen

–

Leeds

–

London

–

Rio de Janeiro

–

Tokyo

–

Atlanta

–

Chicago

–

Dallas

–

New York

–

Philadelphia

–

Richmond

–

San Francisco

Local

Knowledge

Global

Reach

____________________

Note:

Pro forma gross premium written (“GPW”) represents the combined GPW of Max Capital and Harbor Point net of intercompany eliminations of GPW.

Insurance

(26.2% of 2010 P&C GPW)

Reinsurance

(36.1% of 2010 P&C GPW)

Professional

Liability

Property

Excess

Liability

Aviation

General Casualty

Property

Aviation

Workers Comp.

Professional Liability

Other

Med. Mal.

Marine & Energy

Agriculture

2010 GPW: $370.1 million

= pro forma

Auto

Alterra

Has a Strong Market Position in Specialty Classes …

Credit/ Surety

Whole Account

2010 GPW: $509.1 million

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$396.6

$382.9

$389.4

$427.8

$370.1

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

2006

2007

2008

2009

2010

$1,047.7

$998.3

$900.4

2006

2007

2008

2009

2010

$1,060.4

$892.4

U.S. Specialty

(23.0% of 2010 P&C GPW)

Alterra

at Lloyd’s

(14.4% of 2010 P&C GPW)

…With an Attractive Position in the U.S. Market and Lloyd’s

Professional

Liability

Property

Marine

General

Liability

Property

Aviation

Fin. Institutions

Prof. Liability

Accident & Health

2009 GPW: $285.5 million

2009 GPW: $129.0 million

2010 GPW: $324.0 million

2010 GPW: $202.6 million

Launched in 2007

Nationwide niche E&S underwriter

84% non-admitted

2010 combined ratio = 97.9%

Acquired in November 2008

Direct and reinsurance

2010 combined ratio = 83.4%

Int’l Casualty

Surety

Long-Tail

Short-Tail

North America

Europe

Other

Credit/ Surety and

Other Short-Tail

Agriculture

Marine & Energy

Property

Aviation

Auto

Professional

Liability

Medical Malpractice

General Casualty

Workers’

Comp

Whole Account

Reinsurance

(2)

Insurance

Mixed

2010 GPW = $1,410.7 million

____________________

(1) Pro forma as if the amalgamation occurred on January 1, 2010.

(2) Includes Reinsurance segment (49.7%), Life & Annuity reinsurance (0.3%) and reinsurance written through Lloyd’s platform (7.4%).

Diversified and Balanced Business Mix

Global Platform

(1)

Line of Business

(1)

2010 pro forma GPW = $1,794.1 million

Accident & Health

Life & Annuity

Positioned to Successfully Execute

____________________

(1) Shareholders' equity of Max Capital and Harbor Point on a

combined pro forma basis.

Peer PML’s

as a Percent of Common Equity

C&S ($B): $3.5

$2.7

1.1

$3.1

$5.1

$1.9

$2.9

$4.2

$4.3

$3.1

$6.3

____________________

Note: RNR, MRH and PRE do not disclose their PMLs for either 1-in-100 year events or 1-in-250 year events.

(1) 1-in-100 PML and 1-in-250 for U.S. hurricane is $835 mm and $1,103 mm, respectively. Maximum zonal aggregate is $1.9 billion for U.S. hurricane and California earthquake.

(2) Self-imposed limit of 25% of total capital.

(3) 1-in-100 PML for U.S. hurricane is $1,085 mm based on an industry loss modeled at $121 billion. 1-in-250 for U.S. hurricane is $1,459 mm based on an industry loss modeled at $195 billion.

(4) Tri-county Florida is the largest zonal exposure. Northeast wind was $733 mm. Self-imposed limit of 25% of common equity.

(5) 1-in-100 PML for U.S. wind is $309 mm. 1-in-250 for U.S. quake is $287 mm, and 1-in-250 for U.S. wind of $390 mm. Historically, 1-in-100 was approximately 12% of total capital.

Our strategy is to diversify our book of business so that property cat

is a part of our business but not our whole business

Our results demonstrate that we know our risk exposure

Our

reserving

process

has

been

tested

large,

recent

loss

events

including:

2011 Australian floods, New Zealand earthquake, Japanese

earthquake and tsunami

2010 Chilean earthquake, New Zealand earthquake

2008 Hurricanes Ike/Gustav

Superior Risk Management Skills

Alterra’s

losses as a % of equity are consistently below our peer

group

average

and

have

not

made

meaningful

adjustments

to loss estimates

2011 –

First Quarter Catastrophe Losses

Alterra

is at the Low End of the Range for Q1 2011 Cat Losses Reported to Date

__________________

Source:

Company

reports

and

SNL

Financial

reported

May

2011

2010 –

Chilean Earthquake / Windstorm Xynthia

Alterra’s Losses Are Consistently Below Peer Group Averages

____________________

Source: Company filings and press releases; losses are generally

disclosed net of tax and net of reinstatement premiums.

(1)

Q2 net losses reflect only losses from the Chilean earthquake. Initial losses include the Chilean earthquake and Windstorm Xynthia.

(2)

net

losses

reflect

estimates

plus

reported

development,

any.

(3)

Initial loss estimate reflects 50% to 90% of Reuters consensus net operating earnings prior to the earthquake, based on disclosure that net income would remain positive for the quarter.

(4)

Initial estimates based on Chile and Xynthia, ultimate losses include the Chilean, Haitian, and Baja earthquakes, Xynthia and the Australian hailstorms. Based on international catastrophe losses being two-thirds of total catastrophe losses as

disclosed in the earnings conference call.

(5)

Initial estimate is as of the first quarter conference call. Both initial and revised estimates reflect only the Chilean earthquake.

(6)

Pro forma; includes losses from Harbor Point and Max Capital prior to the merger. Expressed as a percentage of combined 12/31/09 equity prior to the special dividend.

2008 –

Hurricanes Ike / Gustav

Pro-forma

Basis

Alterra

Losses

Are

Consistently

Below

Peer

Group

Averages

____________________

Source: Company filings, as of 12/31/08. Losses are generally disclosed net of reinstatement premiums.

(1)

Results reflect Ike only.

(2)

Equity includes preferred, which subsequently converted to common.

(3)

Equity includes preferred, which subsequently converted to common.

(4)

TRH does not disclose specific losses but did lose "$169.7 million principally relating to Hurricane Ike."

Florida wind

1 in 100 year event -

$330 million net loss

California earthquake

1 in 250 year event -

$320 million net loss

Europe wind

1 in 100 year event -

$185 million net loss

Alterra’s PML’s In-force as of April 1, 2011

____________________

Note: Based on RMS 10.0

____________________

(1)

Excludes non-traditional, which is composed of structured contracts that Alterra stopped writing in 2003.

(2)

Gross Premiums written for 2006-2010 include premiums written by both Max Capital and Harbor Point after eliminating the impact of intercompany transactions.

Short tail lines contributed to 77% of total growth over

the 3 years to 2010

Strong Cycle Management Discipline

Long Tail (GPW)

Short Tail (GPW)

($ in millions)

Non-Traditional

Year over year growth:

Lloyd's

49.2%

U.S. Specialty

386.2%

47.8%

32.7%

Reinsurance

(1)

21.8%

72.2%

99.8%

(15.9%)

(8.3%)

16.4%

(21.2%)

Insurance

50.7%

30.5%

(2.3%)

(7.9%)

(2.2%)

3.9%

(9.0%)

Total

38.1%

46.6%

43.9%

(11.4%)

1.5%

18.9%

(8.5%)

Lloyd's

61.2%

U.S. Specialty

274.7%

46.5%

4.9%

Reinsurance

(6.1%)

(30.7%)

281.4%

17.2%

(13.7)%

19.2%

(10.0)%

Insurance

141.7%

13.4%

13.5%

25.7%

(23.2%)

Total

(5.0%)

(12.8%)

251.3%

23.0%

5.3%

36.7%

(2.7)%

Reserves for Loss and Loss Expenses

____________________

Note: Includes the results of Harbor Point from May 12, 2010, the closing date of the merger.

($ in millions)

Favorable Reserve

Development

$5.9

$45.1

$90.8

$77.2

$105.5

Development as a

% of Net Reserves

0.3%

2.5%

4.1%

3.4%

Reserve Development

Net Loss Reserves

($ in millions)

____________________

Note: Reserve development and net reserves prior to May 12, 2010 are for Max Capital only. Reserve development excludes changes in reserves resulting from changes in

premium estimates on prior years’contracts.

High Quality, Liquid Investment Portfolio

As of March 31, 2011

Alterra maintains a high quality, liquid portfolio

95.4% of portfolio in fixed income/cash, which consists of highly

rated securities

Assets are generally matched to liabilities

Cycle

management

extends

investments

–

current

posture

is defensive

Cash balance $1,001.1 million or 12.8% of portfolio

Average fixed income duration of approximately 4.1 years, including

cash

63.3% of the cash and fixed maturities portfolio is held in cash,

government / agency-backed securities and “AAA”

securities

69.5% of fixed income portfolio rated “AA”

or better

Hedge fund investments are marked-to-market

Minimal exposure to selected asset classes

CMBS

$355.9

million

(4.8%

portfolio)

–

average

rating

AA+/Aa1

ABS of $115.7 million (1.5% of portfolio)

RMBS

$1,179.0

million

(15.7%

portfolio)

–

92.1%

agency-

backed

No CDO’s, CLO’s, SIV’s or other highly structured securities

Less than $7 million of OTTI losses over the last nine quarters

Carrying Value $7.8 billion

March 31, 2011

Cash

13%

Other

Investments

Fixed Income

82%

____________________

(1)

Price / diluted book value multiple as of 5/5/11.

Strongly Positioned to Build Shareholder Value

Franchise positions in attractive specialty markets

Well established operating platforms provide global access to

business

Diversified business portfolio across casualty and property lines

Opportunistic

approach

–

nimble

and

responsive

market

trends

High-quality liquid investment portfolio

Invested asset leverage intended to drive more consistent returns

Balance sheet strength with low leverage / financial flexibility

Attractive

entry

point

–

price

diluted

book

value

0.84x

(1)

Appendices

March 31,

December 31,

2011

2010

Cash & Fixed Maturities

7,490

7,483

Other Investments

358

378

Premium Receivables

809

589

Losses Recoverable

1,053

956

Other Assets

540

511

Total Assets

10,250

9,917

Property & Casualty Losses

4,185

3,906

Life & Annuity Benefits

1,316

1,276

Deposit Liabilities

147

148

Funds Withheld

122

121

Unearned Premium

1,065

905

Senior Notes

440

Other Liabilities

252

203

Total Liabilites

7,527

6,999

Shareholders' Equity

2,723

2,918

10,250

9,917

Strong Balance Sheet

($ in millions)

YTD Results Comparison

____________________

(1)

Results

for

the

quarter

ended

March

31,

2010

not

include

results

from

Harbor

Point

prior

the

merger

May

12,

2010.

(2)

Pro

forma

information

provided

for

informational

purposes

only

present

summary

the

combined

results

operations

assuming

the

amalgamation

with

Harbor

Point

had

occurred

January

2010.

The

pro

forma

information

assumes

the

elimination

intercompany

transactions

and

the

amortization

certain

acquisition

accounting

fair

value

adjustments. The pro forma information does not necessarily represent results that would have occurred if the amalgamation had taken place on January 1, 2010, nor is it necessarily

indicative of the future results.

($ in millions)

Quarters ended

(1)

Pro forma quarter ended

(2)

March 31,

2011

2010

Gross Premiums Written

628

371

677

Net Premiums Earned

380

194

338

Net Investment Income

Net Realized and Unrealized (Losses) Gains on Investments

(19)

Other Than Temporary Impairment Charges

(1)

Other Income

Total Revenues

419

248

416

Total Losses, Expenses & Taxes

466

212

339

Net (Loss) Income

(47)

Net Operating (Loss) Income

(25)

Property & Casualty Underwriting

Loss Ratio

80.2%

64.6%

Expense Ratio

32.3%

25.9%

Combined Ratio

112.5%

90.5%

Quarter ended March 31, 2011

($ in millions)

____________________

Differences in table due to rounding.

(1)

Property and Casualty only.

Diversified Operating Platform

Life &

Property & Casualty

Annuity

Corporate

Consolidated

Alterra at

Insurance

Reinsurance

U.S. Specialty

Lloyd's

Total

Reinsurance

Gross premiums written

$71.3

$375.0

$70.4

$110.7

$627.4

$0.4

$627.8

Reinsurance premiums ceded

(43.2)

(37.3)

(33.6)

(23.2)

(137.3)

(137.4)

Net premiums written

$28.0

$337.7

$36.8

$87.6

$490.1

$0.4

$490.5

Earned premiums

98.9

249.9

73.2

66.8

488.8

0.4

489.3

Earned premiums ceded

(44.7)

(20.2)

(23.9)

(20.6)

(109.4)

Net premiums earned

$54.2

$229.7

$49.3

$46.2

$379.5

$0.4

$379.9

Net losses and loss expenses

($34.7)

($186.9)

($31.4)

($51.5)

($304.4)

Claims and policy benefits

(14.7)

Acquisition costs

(0.2)

(49.1)

(8.1)

(13.1)

(70.4)

(0.2)

(70.6)

General and administrative expenses

(9.8)

(23.3)

(9.4)

(9.7)

(52.2)

(0.2)

(52.4)

Other income

0.8

0.2

1.0

Underwriting income (loss)

$10.4

($29.6)

$0.5

($27.8)

($46.6)

n/a

$0.0

n/a

Net investment income

$12.3

$45.4

$57.8

Net realized and unrealized losses on investments

2.8

(21.6)

(18.8)

Net impairment losses recognized in earnings

(1.0)

Corporate other income

0.3

Interest expense

(8.5)

Net foreign exchange gains

0.9

Corporate general and administrative expenses

(18.8)

Income (loss) before taxes

$0.5

($3.3)

($49.4)

Loss ratio

63.9%

81.4%

63.6%

111.4%

80.2%

Acquisition cost ratio

0.3%

21.4%

16.4%

28.2%

18.6%

General and administrative expense ratio

18.1%

10.1%

19.1%

21.0%

13.8%

Combined ratio

(1)

82.4%

112.9%

99.0%

160.7%

112.5%

ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - SLIDES FROM PRESENTATION BY MANAGEMENT - May 6, 2011

Attached files