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
EX-10.1 - SEPARATION AGREEMENT - ALTERRA CAPITAL HOLDINGS Ltd	dex101.htm

Investor Presentation

Quarter Ended June 30, 2011

Exhibit 99.1

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; and (14) 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.

Cautionary Note Regarding Forward-Looking Statements

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 positions 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%

Liquid balance sheet with conservative reserving track record

Shareholders’

equity ~ $2.8 billion at 6/30/11

Low operating and financial leverage

Proven track record of active capital management

H1 repurchases of $142.2 million

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

shareholders'

equity

(1)

in 2010 through dividends and

share repurchases

Raised quarterly dividend by 17% in August 2011 to $0.14

per share

Rated

“A”

(Excellent)

Best

(2)

____________________

(1)

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

(2)

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

directed toward the protection of investors in securities of Alterra.

H1 2011 GPW

2010

2011

2010

2011

Second Quarter 2011 Results

Second quarter 2011 net operating diluted

EPS of $0.37 per share

Decrease from 2010 due to high

catastrophe losses and increased

outstanding shares from Harbor Point

merger

P&C gross premiums written grew 41.4% to

$563.0 million (18.3% on a pro forma basis)

Driven by the inclusion of Harbor Point,

new reinsurance business

opportunities, new business in Latin

America, and expansion of business at

Lloyd’s and U.S. Specialty

Net investment income up 12.0% to $59.7

million

Combined ratio of 93.7%

Catastrophe losses of $49.6 million

Diluted book value per share of $25.98 at

6/30/11

P&C GPW

(41.4% increase)

Operating

Diluted EPS

Strong Growth in Gross Premiums Written…

…Operating EPS Impacted By Catastrophe Losses

Operating ROE

10.1%

5.7%

Combined ratio

83.3%

93.7%

$0.64

2010

2011

$0.37

Market on the Cusp of Change . . .

First half global industry cat losses estimated ~ $70 billion

Market is stressed by historic low returns on invested assets

Cash flow levels are deteriorating

Industry reserve redundancies are diminishing

Share repurchase activity slowed due to high cat losses

Property cat underwriting markets improving

Casualty lines showing flat to modest improvement

Pricing poised to further positively move with the next catalyst

Alterra is positioned to be a beneficiary of improving market conditions globally

__________________

As of June 30, 2011

Pricing Mixed But Gradually Improving Globally

__________________

As of June 30, 2011

Results on Alterra’s renewal book

•

Excess liability rates up 1-3%

•

Professional lines D&O down near 20%, E&O up 8-10%. EPL down 6-8%

•

Property rates are flat to up 10% in the US and flat to up 15% on International business

•

Aviation rate declines range from 5-10% with aerospace on the high end

•

Auto rates are up 3-5%

•

General

casualty

rates

are

flat

down

but

showing

signs

hardening

•

Professional liability rates are down 5-10%

•

Medical malpractice declines are 4-6%

•

US property rate increases of 11-13%

•

International rates up 50% for Japan Earthquake, 45% in Australia, and over 200% in New Zealand

•

Property treaty rates up 4-6%

•

Casualty treaty rates up 3-5%

•

Financial institution rates are down 3-5%

•

A&H rates are down 1-2%

•

Latin America remains competitive with rates flat

•

Brokerage property and casualty rates are flat

•

Professional liability rates are up 3-5%

•

Marine rates are up 2-4% on average and 5-10% on accounts with cat exposure

Insurance

Reinsurance

US Specialty

Lloyd’s

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

Experienced &

highly quantitative

underwriting teams

Lead underwriters average over 20 years in the

business

High percentage of employees hold

professional designations

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

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

–

Excess liability

–

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

(17.9% of H1 2011 P&C GPW)

Reinsurance

(52.4% of H1 2011 P&C GPW)

Professional

Liability

Property

Excess

Liability

Aviation

General Casualty

Property

Aviation

Workers Comp.

Professional Liability

Other

Med. Mal.

Marine & Energy

Agriculture

H1 2011 GPW: $212.5 million

= pro forma

Auto

$1,060.4

$623.8

Alterra Has a Strong Market Position in Specialty Classes …

Credit/ Surety

Whole Account

H1 2011 GPW: $623.8 million

2010 GPW: $370.1 million

2010 Pro forma GPW: $892.4 million

$892.4

U.S. Specialty

(14.3% of H1 2011 P&C GPW)

Alterra at Lloyd’s

(15.5% of H1 2011 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

2010 GPW: $324.0 million

2010 GPW: $202.6 million

H1 2011 GPW: $169.8 million

H1 2011 GPW: $184.3 million

Int’l Casualty

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 Harbor Point merger occurred on January 1, 2010.

(2) Includes Reinsurance segment, Life & Annuity reinsurance and

reinsurance written through Lloyd’s platform .

Diversified and Balanced Business Mix

Global Platform

Line of Business

2010

pro

forma

GPW

$1,794.1

million

(1)

Accident & Health

Life & Annuity

H1 2011 GPW = $1,190.4 million

10%

19%

71%

36%

64%

85%

104%

85%

76%

84%

75%

77%

96%

109%

161%

103%

94%

101%

96%

124%

25%

50%

75%

100%

125%

150%

2005

2006

2007

2008

2009

2010

H1'11

Average

Source: Company filings.

Diversified reinsurers include RE, AXS, ACGL, TRH, PRE, AWH, ENH, AHL, PTP, AGII, ALTE and ORH for historical years . Property focused reinsurers include RNR, VR, MRH, FSR and IPCR for historical years.

Diversified Reinsurers

Property Focused Reinsurers

Median

116%

84%

82%

95%

84%

91%

124%

96%

Alterra

106%

86%

88%

92%

88%

86%

104%

93%

Diversified Platforms Generate More Consistent Margins

Alterra has performed well within its diversified peer group with less volatility than property focused reinsurers

Median

201%

55%

61%

89%

66%

84%

143%

100%

Alterra has had one of

the lowest combined

ratios of its peer group

300%

69%

113%

45%

56%

50%

33%

140%

25%

50%

75%

100%

125%

150%

252%

60%

73%

92%

75%

118%

174%

102%

2005

2006

2007

2008

2009

2010

H1'11

Average

300%

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

is one of many parts of our business

Results demonstrate that we adequately manage our risk exposure

Our reserving process has been tested by large, recent loss events

including:

2011 Australian floods, New Zealand earthquake, Japanese

earthquake and tsunami, US spring storms

2010 Chilean earthquake, New Zealand earthquake

2008 Hurricanes Ike/Gustav

Superior Risk Management Skills

Alterra’s

losses

equity

are

consistently

below

our

peer

group

average

and

there

have

not

been

meaningful

adjustments

loss

estimates

Peer PML’s as a Percent of Common Equity

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.

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

10%

15%

20%

25%

30%

35%

VR (1)

ENH (2)

FSR

AHL

AXS (3)

PTP

ALTE

ACGL (4)

TRH

AWH (5)

PML’s as a Percentage of December 31, 2010 Capital and Surplus

1 in 100

1 in 250

2011 –

First Half Catastrophe Losses

Alterra’s H1 Losses are Below the Peer Group Averages

__________________

Source: Company reports and SNL Financial as reported to June 30, 2011

2010 –

Chilean Earthquake / Windstorm Xynthia/

September New Zealand Earthquake

Alterra’s

2010 Losses Are 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 Q1 estimates plus reported development, if any.

(2)

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

(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

On a Pro-forma Basis Alterra’s 2008 Losses Are Below Peer Group Averages

____________________

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

(1)

Equity includes preferred, which subsequently converted to common.

(2)

Results reflect Ike only.

(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 -

$289 million net loss

California earthquake

1 in 250 year event -

$440 million net loss

Europe wind

1 in 100 year event -

$153 million net loss

PML’s In-force as of July 1, 2011

____________________

Note: Based on RMS 10.0

June

30,

2011

PML

target

20%

beginning

shareholders’

equity

for

1:250

year event

Absorbed RMS 11.0 within our basic target

Lower end of stated ranges versus our peer group

Track

record

opportunistically

expanding

inflection

points

the

cycle

Flexibility to adjust cat aggregates as pricing improves

Increasing

our

risk

appetite

would

equate

approximately

$150 million of

PML

The 20% PML target is an internal target that can be adjusted based on market

opportunity

Multiple tools to optimize performance in a harder market include:

Ability to expand underwriting capacity through New Point IV

Retain more and cede less business to reinsurers

Low financial and operating leverage provides flexibility

Positioned To Capitalize on Higher Reinsurance Rates

Alterra Expects To Benefit As Harder Market Conditions Emerge

Reserves for Loss and Loss Expenses

____________________

Note: As of 6/30/2011 and 12/31/2010; includes the results of Harbor Point from May 12, 2010, the closing date of the merger.

($ in millions)

30%

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)

$1,840

$1,796

$2,128

$2,213

$2,985

500

1,000

1,500

2,000

2,500

3,000

3,500

2006

2007

2008

2009

2010

Note: As of year-end 2010; 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 June 30, 2011

Alterra maintains a high quality, liquid portfolio

95.6% of portfolio in fixed income/cash, which consists of highly

rated securities

Assets are generally matched to liabilities

Cycle

management

extends

investments

–

H1 posture was

defensive

Cash balance $987.1 million or 12.4% of portfolio

Average fixed income duration of approximately 4.1 years, including

cash

62.9% of the cash and fixed maturities portfolio is held in cash,

government

agency-backed

securities

and

“AAA”

securities

69.0%

fixed

income

portfolio

rated

“AA”

better

Hedge fund investments are marked-to-market

Minimal exposure to selected asset classes

CMBS

$383.9

million

(4.8%

portfolio)

–

average

rating

AA+/Aa1

ABS of $204.6 million (2.6% of portfolio)

RMBS

$1,159.9

million

(14.6%

portfolio)

–

96.7%

agency-

backed

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

Less than $7.5 million of OTTI losses over the last ten

quarters

Carrying Value $8.0 billion

June 30, 2011

Foreign Sovereign Exposure

As of June 30, 2011

Foreign sovereign debt represents $784.7

million or 9.8% of the $8.0 billion investment

portfolio

By country:

$277.5 million, or 3.5% of total portfolio in

France

$243.1 million, or 3.0% of total portfolio in

Germany

$140.8 million, or 1.8% of total portfolio in the

Netherlands

$616.4 million or 78.6% of foreign sovereigns

are in our held to maturity portfolio

Highly rated portfolio

91.5% of foreign sovereign securities are rated

AAA

3.1% are rated AA+

0.5% are rated AA

3.1% are rated BBB-

Fair Value $784.7 million

Geographic and Ratings Split of Foreign

Sovereign Debt

____________________

Note:

Primary price / diluted book value multiple as of 8/29/11.

Well Positioned to Build Shareholder Value

Franchise positions in attractive specialty markets

Established operating platforms provide global access to business

Diversified business portfolio across casualty and property lines

Opportunistic

approach

–

nimble

and responsive to 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 of 0.78x

Appendices

June 30,

December 31,

2011

2010

Cash & Fixed Maturities

7,603

7,483

Other Investments

350

378

Premium Receivables

870

589

Losses Recoverable

1,059

956

Other Assets

615

511

Total Assets

10,497

9,917

Property & Casualty Losses

4,230

3,906

Life & Annuity Benefits

1,318

1,276

Deposit Liabilities

147

148

Funds Withheld

123

121

Unearned Premium

1,203

905

Senior Notes

440

Other Liabilities

243

203

Total Liabilites

7,704

6,999

Shareholders' Equity

2,793

2,918

10,497

9,917

Strong Balance Sheet

($ in millions)

(1)

Results for the year ended December 31, 2010 include results from Harbor Point following the close of the merger on May 12, 2010.

YTD Results Comparison

($ in millions)

Six months ended

(1)

Pro forma six months ended

(2)

June 30,

2011

2010

Gross Premiums Written

1,192

770

1,153

Net Premiums Earned

729

488

706

Net Investment Income

117

102

126

Net Realized and Unrealized (Losses) Gains on Investments

(25)

(8)

Other Than Temporary Impairment Charges

(1)

Other Income

Total Revenues

822

581

832

Total Losses, Expenses & Taxes

836

441

702

Net (Loss) Income

(14)

140

130

Net Operating Income

Property & Casualty Underwriting

Loss Ratio

70.9%

58.6%

Expense Ratio

32.6%

27.6%

Combined Ratio

103.5%

86.2%

(1)

Results for the six months ended June 30, 2010 do not include results from Harbor Point prior to the merger on May 12, 2010.

(2)

Pro forma information is provided for informational purposes only to present a summary of the combined results of operations assuming the merger with Harbor Point had

occurred on January 1, 2010. The pro forma information assumes the elimination of intercompany transactions and the amortization of certain acquisition accounting fair value

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

indicative of the future results.

Six months ended June 30, 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

$212.5

$623.8

$169.8

$184.3

$1,190.4

$1.4

$1,191.8

Reinsurance premiums ceded

(99.2)

(65.6)

(61.0)

(48.1)

(273.9)

(0.1)

(274.0)

Net premiums written

$113.3

$558.2

$108.9

$136.2

$916.5

$1.2

$917.8

Earned premiums

196.2

459.1

147.0

128.5

930.9

1.4

932.3

Earned premiums ceded

(89.1)

(32.5)

(46.6)

(35.1)

(203.3)

(0.1)

203.4

Net premiums earned

$107.2

$426.6

$100.4

$93.4

$727.6

$1.2

$728.8

Net losses and loss expenses

($63.7)

($312.5)

($64.1)

($75.3)

($515.5)

Claims and policy benefits

(30.3)

Acquisition costs

0.2

(93.5)

(17.7)

(24.0)

(135.0)

(0.3)

(135.3)

General and administrative expenses

(18.7)

(46.2)

(18.7)

(19.3)

(102.8)

(0.4)

(103.3)

Other income

1.0

0.5

0.4

1.9

Underwriting income (loss)

$26.0

($25.0)

($0.1)

($24.8)

($23.9)

n/a

$0.0

n/a

Net investment income

$24.9

$92.5

$117.4

Net realized and unrealized gains (losses) on investments

1.5

(26.1)

(24.6)

Net impairment losses recognized in earnings

(1.4)

Corporate other income

0.1

Interest expense

(19.1)

Net foreign exchange gains

(2.2)

Corporate general and administrative expenses

(37.6)

Income (loss) before taxes

($3.4)

$6.2

($21.1)

Loss ratio

59.4%

73.2%

63.8%

80.6%

70.9%

Acquisition cost ratio

-0.2%

21.9%

17.6%

25.7%

18.6%

General and administrative expense ratio

17.4%

10.8%

18.6%

20.6%

14.1%

Combined ratio

(1)

76.7%

106.0%

100.1%

126.9%

103.5%

ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - SLIDES FROM PRESENTATION BY MANAGEMENT - September 1, 2011

Attached files