ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED, ANNOUNCING FINANCIAL RESULTS

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8-K - FORM 8-K - ALTERRA CAPITAL HOLDINGS Ltd	d249345d8k.htm
EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT FOR THE QUARTER - ALTERRA CAPITAL HOLDINGS Ltd	d249345dex992.htm
EX-99.3 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED - ALTERRA CAPITAL HOLDINGS Ltd	d249345dex993.htm

Exhibit 99.1

ALTERRA CAPITAL REPORTS THIRD QUARTER 2011 RESULTS

Net Operating Income of $0.47 per Diluted Share

Diluted Book Value per Share Increase of 4.6%

HAMILTON, BERMUDA, November 1, 2011—Alterra Capital Holdings Limited (NASDAQ: ALTE; BSX: ALTE.BH) (“Alterra”) today reported net income of $48.4 million, or $0.46 per diluted share, for the third quarter of 2011, compared to net income of $82.8 million, or $0.70 per diluted share, for the same quarter of 2010.

Net operating income for the third quarter of 2011 was $50.1 million, or $0.47 per diluted share, compared to net operating income of $76.0 million, or $0.64 per diluted share, for the same quarter of 2010. Annualized net operating return on average shareholders’ equity for the third quarter of 2011 was 7.1%.

For the nine months ended September 30, 2011, Alterra reported net income of $34.3 million, or $0.32 per diluted share, compared to net income of $222.7 million, or $2.50 per diluted share, for the same period of 2010. Net operating income for the nine months ended September 30, 2011 was $64.9 million, or $0.61 per diluted share, compared to net operating income of $175.5 million, or $1.97 per diluted share, for the same period of 2010. Annualized net operating return on average shareholders’ equity for the nine months ended September 30, 2011 was 3.1%.

Alterra’s 2010 results include the results of operations for the former Harbor Point Limited (“Harbor Point”) companies from May 12, 2010. Accordingly, a comparison of Alterra’s gross premiums written and other results of operations for current and prior nine month periods are not meaningful. Selected pro forma combined results of operations for periods prior to the merger for the reinsurance segment are provided in Alterra’s third quarter financial supplement available on Alterra’s website at www.alterracap.com.

W. Marston (Marty) Becker, President and Chief Executive Officer of Alterra, said: “Alterra’s reported results reflect a balanced quarter, with solid operating earnings across our segments and nearly 5% growth in diluted book value per share. Earnings are down compared to the prior year, pressured by higher catastrophe losses and lower investment yields. However, we remain pleased with the consistency of our underwriting results in the face of a very challenging year for property catastrophe business. The relatively limited impact of this year’s property catastrophe events on our results and the absence of negative development of our loss estimates beyond initially stated ranges continue to reflect favorably on the quality of Alterra’s diversified underwriting, risk management and reserving capabilities. As we near the end of the Atlantic hurricane season and approach the January renewal season, we believe that we have the capital and operational breadth and flexibility to take advantage of what appear to be more favorable market opportunities.”

Third quarter 2011 results for Alterra include:

•

Property and casualty gross premiums written of $385.5 million, representing an increase of $61.6 million, or 19.0%; net premiums written of $294.7 million, representing an increase of $31.3 million, or 11.9%; and net premiums earned of $346.3 million, representing an increase of $5.1 million, or 1.5%; each as compared to the same quarter of 2010;

•

A combined ratio on property and casualty business of 87.7% compared to 86.0% for the same quarter of 2010;

•

Property catastrophe event and significant per-risk net losses of $42.8 million ($42.1 million net of reinstatement premiums) compared to $14.1 million in the same quarter of 2010. Losses net of reinsurance and reinstatements include $21.8 million for natural disasters during the third quarter of 2011, including Hurricane Irene. The remainder of the net losses relate to increased loss estimates on first and second quarter property catastrophe loss events, which remain within previously announced ranges;

•

Net favorable development on prior years’ loss reserves of $31.7 million, or 9.1 combined ratio points, compared to $36.4 million, or 10.7 combined ratio points, in the same quarter of 2010;

•

Net investment income of $60.3 million compared to $59.7 million in the same quarter of 2010, an increase of 1.0%; and

•

Net operating income of $50.1 million, or $0.47 per diluted share, representing an annualized net operating return on average shareholders’ equity of 7.1%.

Gross premiums written from property and casualty underwriting for the third quarter of 2011 were $385.5 million, generated by the segments as follows: insurance - $86.0 million, an increase of $8.1 million, or 10.3%; reinsurance - $156.8 million, an increase of $32.8 million, or 26.4%; U.S. specialty - $72.2 million, an increase of $8.0 million, or 12.4%; and Alterra at Lloyd’s - $70.6 million, an increase of $12.8 million, or 22.2%; each as compared to the same quarter of 2010.

Combined ratios for the third quarter of 2011 by segment were 64.1% for insurance, 88.2% for reinsurance, 101.4% for U.S. specialty and 95.8% for Alterra at Lloyd’s.

Results for the nine months ended September 30, 2011 include:

•

Property and casualty gross premiums written of $1,575.9 million, representing an increase of $483.6 million, or 44.3%; net premiums written of $1,211.2 million, representing an increase of $412.2 million, or 51.6%; and net premiums earned of $1,073.9 million, representing an increase of $246.7 million, or 29.8%; each as compared to the same period of 2010. These increases primarily reflect the impact of the merger with Harbor Point - whose premiums are not included for the period prior to the merger;

•

A combined ratio on property and casualty business of 98.4% compared to 86.1% for the same period of 2010;

•

Property catastrophe event and significant per-risk net losses of $208.7 million ($197.9 million net of reinstatement premiums) compared to $44.0 million in the same period of 2010. Property catastrophe losses principally affected the reinsurance and Alterra at Lloyd’s segments;

•

Net favorable development on prior years’ loss reserves of $110.4 million, or 10.3 combined ratio points, compared to $77.6 million, or 9.4 combined ratio points, in the same period of 2010;

•

Net investment income of $177.8 million compared to $161.4 million in the same period of 2010, an increase of 10.2%;

•

A loss of principal of $25.0 million on a catastrophe bond investment triggered by the Japan earthquake and tsunami, included within net realized and unrealized losses on investments; and

•

Net operating income of $64.9 million, or $0.61 per diluted share, representing an annualized net operating return on average shareholders’ equity of 3.1%.

Gross premiums written from property and casualty underwriting for the nine months ended September 30, 2011 were $1,575.9 million, generated by the segments as follows: insurance - $298.5 million, an increase of $12.1 million, or 4.2%; reinsurance - $780.6 million, an increase of $382.1 million, or 95.9%; U.S. specialty - $242.0 million, an increase of $13.1 million, or 5.7%; and Alterra at Lloyd’s - $254.8 million, an increase of $76.2 million, or 42.6%; each as compared to the same period of 2010.

Combined ratios for the nine months ended September 30, 2011 by segment were 72.7% for insurance, 100.3% for reinsurance, 100.5% for U.S. specialty and 116.5% for Alterra at Lloyd’s.

Balance Sheet

Total invested assets, including cash and cash equivalents, were $7,999.1 million as of September 30, 2011, an increase of $137.8 million from December 31, 2010. As of September 30, 2011, 95.1% of the fixed maturities portfolio (by carrying value) was investment-grade, a decrease from 96.0% as of December 31, 2010. As of September 30, 2011, the weighted average book yield of Alterra’s cash and fixed maturities portfolio was 3.35% and the weighted average duration was 4.2 years.

Under the Board-approved share repurchase authorization, Alterra repurchased 1,446,442 common shares during the third quarter of 2011 at an average price of $19.41 per share for a total of $28.1 million. Share repurchases under the Board-approved share repurchase authorization for the nine months ended September 30, 2011 were 7,943,592 common shares at an average price of $21.44 per share for a total of $170.3 million. As of September 30, 2011, $157.5 million remained under the Board-approved share repurchase authorization.

Shareholders’ equity was $2,844.7 million as of September 30, 2011, an increase of 1.8% from June 30, 2011. Diluted book value per share as of September 30, 2011 was $27.18, an increase of 4.6% from June 30, 2011.

A copy of Alterra’s third quarter financial supplement is available on Alterra’s website at www.alterracap.com.

Alterra will host a conference call on Wednesday, November 2, 2011 at 10:00 am (EDT) to discuss these results and related matters with interested investors and shareholders. The conference call can be accessed via telephone by dialing 1-888-680-0878 (toll-free U.S.) or 1-617-213-4855 (international) and using access code 81760320. A live broadcast of the conference call will also be available through Alterra’s website at www.alterracap.com.

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

Non-GAAP Financial Measures

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

Cautionary Note Regarding Forward-Looking Statements

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

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

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


	September 30, 2011		December 31, 2010
	(unaudited)
ASSETS
Cash and cash equivalents	$	869,975	$	905,606
Fixed maturities, trading at fair value		227,753		244,872
Fixed maturities, available for sale at fair value		5,662,869		5,392,643
Fixed maturities, held to maturity at amortized cost (fair value $1,073,174)		926,916		940,104
Other investments, at fair value		311,633		378,128
Accrued interest income		71,038		75,414
Premiums receivable		777,980		588,537
Losses and benefits recoverable from reinsurers		1,079,035		956,115
Deferred acquisition costs		166,353		111,901
Prepaid reinsurance premiums		214,132		149,252
Trades pending settlement		34,158		32,393
Goodwill and intangible assets		56,652		59,076
Other assets		73,836		83,247

Total assets	$	10,472,330	$	9,917,288

LIABILITIES
Property and casualty losses	$	4,205,057	$	3,906,134
Life and annuity benefits		1,230,344		1,275,580
Deposit liabilities		147,493		147,612
Funds withheld from reinsurers		124,631		121,107
Unearned property and casualty premiums		1,149,108		905,487
Reinsurance balances payable		178,560		102,942
Accounts payable and accrued expenses		110,527		99,680
Trades pending settlement		41,383		—
Senior notes		440,489		440,476

Total liabilities		7,627,592		6,999,018

SHAREHOLDERS’ EQUITY
Common shares (par value $1.00) 104,323,873 (2010 - 110,963,160) shares issued and outstanding		104,324		110,963
Additional paid-in capital		1,890,763		2,026,045
Accumulated other comprehensive income		173,025		98,946
Retained earnings		676,626		682,316

Total shareholders’ equity		2,844,738		2,918,270

Total liabilities and shareholders’ equity	$	10,472,330	$	9,917,288

Book value per share	$	27.27	$	26.30

Diluted book value per share	$	27.18	$	25.99

Diluted tangible book value per share [a]	$	26.64	$	25.46

Diluted shares outstanding		104,665,209		112,290,968

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

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
REVENUES
Gross premiums written	$	386,328		$	325,213		$	1,578,083		$	1,095,333
Reinsurance premiums ceded		(90,891	)		(60,611	)		(364,874	)		(293,546	)

Net premiums written	$	295,437		$	264,602		$	1,213,209		$	801,787

Earned premiums	$	452,931		$	436,244		$	1,385,201		$	1,132,964
Earned premiums ceded		(105,889	)		(93,812	)		(309,331	)		(303,032	)

Net premiums earned		347,042			342,432			1,075,870			829,932
Net investment income		60,335			59,711			177,766			161,378
Net realized and unrealized (losses) gains on investments		(7,972	)		15,411			(32,564	)		7,047
Total other-than-temporary impairment losses		(692	)		(90	)		(2,003	)		(1,955	)
Portion of loss recognized in other comprehensive income (loss), before taxes		(169	)		(61	)		(240	)		1,084

Net impairment losses recognized in earnings		(861	)		(151	)		(2,243	)		(871	)
Other income		1,473			1,327			3,379			1,946

Total revenues		400,017			418,730			1,222,208			999,432

LOSSES AND EXPENSES
Net losses and loss expenses		198,521			191,012			714,060			475,794
Claims and policy benefits		14,538			15,060			44,818			46,662
Acquisition costs		61,434			60,859			196,722			133,901
Interest expense		11,303			7,551			30,392			20,409
Net foreign exchange (gains) losses		(147	)		3,353			2,065			267
Merger and acquisition expenses		—			550			—			(49,276	)
General and administrative expenses		61,555			56,650			202,417			143,827

Total losses and expenses		347,204			335,035			1,190,474			771,584

INCOME BEFORE TAXES		52,813			83,695			31,734			227,848
Income tax expense (benefit)		4,427			858			(2,600	)		5,183

NET INCOME [a]		48,386			82,837			34,334			222,665
Change in net unrealized gains and losses on fixed maturities, net of tax		61,540			74,383			89,774			169,039
Foreign currency translation adjustment		(20,733	)		13,224			(15,695	)		(4,145	)

COMPREHENSIVE INCOME [a]	$	89,193		$	170,444		$	108,413		$	387,559

Net income per share	$	0.46		$	0.71		$	0.32		$	2.52

Net income per diluted share	$	0.46		$	0.70		$	0.32		$	2.50

Net operating income per diluted share [b]	$	0.47		$	0.64		$	0.61		$	1.97

Weighted average shares outstanding - basic		104,830,300			117,200,505			105,866,771			88,253,609

Weighted average shares outstanding - diluted		105,665,282			117,957,942			107,092,882			89,001,515

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

[b]	Non-GAAP measure as defined by Regulation G.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(Expressed in thousands of United States Dollars)


	Nine Months Ended September 30,
	2011			2010
Common shares
Balance, beginning of period	$	110,963		$	55,867
Issuance of common shares, net		1,384			65,084
Repurchase of common shares		(8,023	)		(5,052	)

Balance, end of period		104,324			115,899

Additional paid-in capital
Balance, beginning of period		2,026,045			752,309
Issuance of common shares, net		632			1,418,214
Stock based compensation expense		28,014			36,600
Repurchase of common shares		(163,928	)		(93,391	)

Balance, end of period		1,890,763			2,113,732

Accumulated other comprehensive income
Unrealized holding gains (losses) on investments:
Balance, beginning of period		118,197			36,791
Holding gains on available for sale securities arising in period [a]		97,610			179,482
Net realized gains on available for sale securities included in net income [a]		(8,076	)		(9,359	)
Portion of other-than-temporary impairment losses recognised in other comprehensive income [a]		240			(1,084	)

Balance, end of period		207,971			205,830
Cumulative foreign currency translation adjustment:
Balance, beginning of period		(19,251	)		(11,360	)
Foreign currency translation adjustments		(15,695	)		(4,145	)

Balance, end of period		(34,946	)		(15,505	)

Total accumulated other comprehensive income		173,025			190,325

Retained earnings
Balance, beginning of period		682,316			731,026
Net income		34,334			222,665
Dividends		(40,024	)		(337,110	)

Balance, end of period		676,626			616,581

Total shareholders’ equity	$	2,844,738		$	3,036,537

[a]	Net of tax

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Expressed in thousands of United States Dollars)


	Nine Months Ended September 30,
	2011			2010
OPERATING ACTIVITIES
Net income	$	34,334		$	222,665
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		28,014			36,600
Amortization of premium on fixed maturities		15,383			10,973
Accretion of deposit liabilities		4,245			3,940
Net realized and unrealized losses (gains) on investments		32,564			(7,047	)
Net impairment losses recognized in earnings		2,243			871
Negative goodwill gain		—			(95,788	)
Changes in:
Accrued interest income		4,370			(822	)
Premiums receivable		(188,751	)		266,878
Losses and benefits recoverable from reinsurers		(123,268	)		(9,975	)
Deferred acquisition costs		(54,495	)		(38,485	)
Prepaid reinsurance premiums		(65,156	)		10,865
Other assets		5,652			3,407
Property and casualty losses		293,119			(166,930	)
Life and annuity benefits		(47,023	)		(24,819	)
Funds withheld from reinsurers		3,524			(20,220	)
Unearned property and casualty premiums		244,206			12,092
Reinsurance balances payable		75,643			(28,025	)
Accounts payable and accrued expenses		10,871			(7,167	)

Cash provided by operating activities		275,475			169,013

INVESTING ACTIVITIES
Purchases of available for sale securities		(1,929,474	)		(1,752,420	)
Sales of available for sale securities		1,126,984			892,465
Redemptions/maturities of available for sale securities		660,245			702,506
Purchases of trading securities		(50,971	)		(55,812	)
Sales of trading securities		24,563			14,097
Redemptions/maturities of trading securities		44,231			19,361
Purchases of held to maturity securities		(2,580	)		(16,961	)
Redemptions/maturities of held to maturity securities		18,251			23,599
Net purchases/sales of other investments		27,353			78,985
Acquisition of subsidiary, net of cash acquired		—			446,819

Cash (used in) provided by investing activities		(81,398	)		352,639

FINANCING ACTIVITIES
Net proceeds from issuance of common shares		2,016			1,478
Repurchase of common shares		(171,951	)		(98,443	)
Net proceeds from issuance of senior notes		—			349,997
Net repayments of bank loans		—			(200,000	)
Dividends paid		(39,894	)		(335,560	)
Additions to deposit liabilities		334			3,453
Payment of deposit liabilities		(5,056	)		(12,747	)

Cash used in financing activities		(214,551	)		(291,822	)

Effect of exchange rate changes on foreign currency cash and cash equivalents		(15,157	)		(6,356	)
Net (decrease) increase in cash and cash equivalents		(35,631	)		223,474
Cash and cash equivalents, beginning of period		905,606			702,278

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	869,975		$	925,752

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid totaled $25,320 and $5,394 for the nine months ended September 30, 2011 and 2010, respectively.

Income taxes paid totaled $172 and $4,068 for the nine months ended September 30, 2011 and 2010, respectively.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED SEPTEMBER 30, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)

Quarter Segment Information:


	Property & Casualty															Life & Annuity
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance			Corporate			Consolidated
Gross premiums written	$	85,996		$	156,784		$	72,159		$	70,567		$	385,506		$	822		$	—		$	386,328
Reinsurance premiums ceded		(43,195	)		(15,874	)		(25,009	)		(6,723	)		(90,801	)		(90	)		—			(90,891	)

Net premiums written	$	42,801		$	140,910		$	47,150		$	63,844		$	294,705		$	732		$	—		$	295,437

Earned premiums	$	101,355		$	217,763		$	75,391		$	57,600		$	452,109		$	822		$	—		$	452,931
Earned premiums ceded		(51,578	)		(18,489	)		(24,882	)		(10,850	)		(105,799	)		(90	)		—			(105,889	)

Net premiums earned		49,777			199,274			50,509			46,750			346,310			732			—			347,042
Net losses and loss expenses		(23,649	)		(113,757	)		(33,641	)		(27,474	)		(198,521	)		—			—			(198,521	)
Claims and policy benefits		—			—			—			—			—			(14,538	)		—			(14,538	)
Acquisition costs		609			(44,298	)		(9,530	)		(8,070	)		(61,289	)		(145	)		—			(61,434	)
General and administrative expenses		(8,861	)		(17,673	)		(8,066	)		(9,235	)		(43,835	)		(145	)		—			(43,980	)
Other income (loss)		58			777			—			(27	)		808			(8	)		—			800

Underwriting income (loss)	$	17,934		$	24,323		$	(728	)	$	1,944		$	43,473			n/a			—			n/a
Net investment income																	12,131			48,204			60,335
Net realized and unrealized losses on investments																	(6,407	)		(1,565	)		(7,972	)
Net impairment losses recognized in earnings																				(861	)		(861	)
Corporate other income																				673			673
Interest expense																				(11,303	)		(11,303	)
Net foreign exchange gains																				147			147
Corporate general and administrative expenses																				(17,575	)		(17,575	)

(Loss) income before taxes																$	(8,380	)	$	17,720		$	52,813

Loss ratio [a]		47.5	%		57.1	%		66.6	%		58.8	%		57.3	%
Acquisition cost ratio [b]		(1.2	%)		22.2	%		18.9	%		17.3	%		17.7	%
General and adminstrative expense ratio [c]		17.8	%		8.9	%		16.0	%		19.8	%		12.7	%

Combined ratio [d]		64.1	%		88.2	%		101.4	%		95.8	%		87.7	%

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–NINE MONTHS ENDED SEPTEMBER 30, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)

Period Segment Information:


	Property & Casualty															Life & Annuity
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance			Corporate			Consolidated
Gross premiums written	$	298,523		$	780,558		$	241,995		$	254,820		$	1,575,896		$	2,187		$	—		$	1,578,083
Reinsurance premiums ceded		(142,443	)		(81,438	)		(85,962	)		(54,820	)		(364,663	)		(211	)		—			(364,874	)

Net premiums written	$	156,080		$	699,120		$	156,033		$	200,000		$	1,211,233		$	1,976		$	—		$	1,213,209

Earned premiums	$	297,595		$	676,876		$	222,408		$	186,135		$	1,383,014		$	2,187		$	—		$	1,385,201
Earned premiums ceded		(140,646	)		(50,989	)		(71,515	)		(45,970	)		(309,120	)		(211	)		—			(309,331	)

Net premiums earned		156,949			625,887			150,893			140,165			1,073,894			1,976			—			1,075,870
Net losses and loss expenses		(87,305	)		(426,234	)		(97,725	)		(102,796	)		(714,060	)		—			—			(714,060	)
Claims and policy benefits		—			—			—			—			—			(44,818	)		—			(44,818	)
Acquisition costs		786			(137,807	)		(27,240	)		(32,035	)		(196,296	)		(426	)		—			(196,722	)
General and administrative expenses		(27,545	)		(63,868	)		(26,752	)		(28,494	)		(146,659	)		(581	)		—			(147,240	)
Other income (loss)		1,009			1,325			—			353			2,687			(31	)		—			2,656

Underwriting income (loss)	$	43,894		$	(697	)	$	(824	)	$	(22,807	)	$	19,566			n/a			—			n/a
Net investment income																	37,019			140,747			177,766
Net realized and unrealized losses on investments																	(4,899	)		(27,665	)		(32,564	)
Net impairment losses recognized in earnings																				(2,243	)		(2,243	)
Corporate other income																				723			723
Interest expense																				(30,392	)		(30,392	)
Net foreign exchange losses																				(2,065	)		(2,065	)
Corporate general and administrative expenses																				(55,177	)		(55,177	)

(Loss) income before taxes																$	(11,760	)	$	23,928		$	31,734

Loss ratio [a]		55.6	%		68.1	%		64.8	%		73.3	%		66.5	%
Acquisition cost ratio [b]		(0.5	%)		22.0	%		18.1	%		22.9	%		18.3	%
General and adminstrative expense ratio [c]		17.6	%		10.2	%		17.7	%		20.3	%		13.7	%

Combined ratio [d]		72.7	%		100.3	%		100.5	%		116.5	%		98.4	%

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

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned.

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned.

[d]	The combined ratio is calculated by dividing the sum of net losses and loss expenses, acquisition costs and general and administrative expenses by net premiums earned. Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED SEPTEMBER 30, 2010 (Unaudited)

(Expressed in thousands of United States Dollars)

Quarter Segment Information:


	Property & Casualty															Life & Annuity
	Insurance [e]			Reinsurance			U.S. Specialty [e]			Alterra at Lloyd’s			Total			Reinsurance			Corporate			Consolidated
Gross premiums written	$	77,944		$	124,004		$	64,198		$	57,734		$	323,880		$	1,333		$	—		$	325,213
Reinsurance premiums ceded		(36,875	)		(2,524	)		(18,713	)		(2,397	)		(60,509	)		(102	)		—			(60,611	)

Net premiums written	$	41,069		$	121,480		$	45,485		$	55,337		$	263,371		$	1,231		$	—		$	264,602

Earned premiums	$	102,640		$	213,510		$	73,337		$	45,424		$	434,911		$	1,333		$	—		$	436,244
Earned premiums ceded		(42,796	)		(15,533	)		(26,071	)		(9,310	)		(93,710	)		(102	)		—			(93,812	)

Net premiums earned		59,844			197,977			47,266			36,114			341,201			1,231			—			342,432
Net losses and loss expenses		(26,679	)		(117,671	)		(29,295	)		(17,367	)		(191,012	)		—			—			(191,012	)
Claims and policy benefits		—			—			—			—			—			(15,060	)		—			(15,060	)
Acquisition costs		(1,382	)		(45,069	)		(6,763	)		(7,474	)		(60,688	)		(171	)		—			(60,859	)
General and administrative expenses		(7,717	)		(17,580	)		(8,693	)		(7,806	)		(41,796	)		(577	)		—			(42,373	)
Other income (loss)		1,108			61			—			177			1,346			(43	)		—			1,303

Underwriting income	$	25,174		$	17,718		$	2,515		$	3,644		$	49,051			n/a			—			n/a
Net investment income																	12,182			47,529			59,711
Net realized and unrealized gains on investments																	3,321			12,090			15,411
Net impairment losses recognized in earnings																				(151	)		(151	)
Corporate other income																				24			24
Interest expense																				(7,551	)		(7,551	)
Net foreign exchange losses																				(3,353	)		(3,353	)
Merger and acquisition expenses																				(550	)		(550	)
Corporate general and administrative expenses																				(14,277	)		(14,277	)

Income before taxes																$	883		$	33,761		$	83,695

Loss ratio [a]		44.6	%		59.4	%		62.0	%		48.1	%		56.0	%
Acquisition cost ratio [b]		2.3	%		22.8	%		14.3	%		20.7	%		17.8	%
General and adminstrative expense ratio [c]		12.9	%		8.9	%		18.4	%		21.6	%		12.2	%

Combined ratio [d]		59.8	%		91.1	%		94.7	%		90.4	%		86.0	%

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–NINE MONTHS ENDED SEPTEMBER 30, 2010 (Unaudited)

(Expressed in thousands of United States Dollars)

Period Segment Information:


	Property & Casualty															Life & Annuity
	Insurance [e]			Reinsurance			U.S. Specialty [e]			Alterra at Lloyd’s			Total			Reinsurance			Corporate			Consolidated
Gross premiums written	$	286,376		$	398,433		$	228,873		$	178,653		$	1,092,335		$	2,998		$	—		$	1,095,333
Reinsurance premiums ceded		(123,963	)		(61,223	)		(72,537	)		(35,589	)		(293,312	)		(234	)		—			(293,546	)

Net premiums written	$	162,413		$	337,210		$	156,336		$	143,064		$	799,023		$	2,764		$	—		$	801,787

Earned premiums	$	309,227		$	483,982		$	213,587		$	123,170		$	1,129,966		$	2,998		$	—		$	1,132,964
Earned premiums ceded		(136,837	)		(50,545	)		(91,517	)		(23,899	)		(302,798	)		(234	)		—			(303,032	)

Net premiums earned		172,390			433,437			122,070			99,271			827,168			2,764			—			829,932
Net losses and loss expenses		(104,421	)		(250,177	)		(75,174	)		(46,022	)		(475,794	)		—			—			(475,794	)
Claims and policy benefits		—			—			—			—			—			(46,662	)		—			(46,662	)
Acquisition costs		(1,886	)		(92,708	)		(19,556	)		(19,311	)		(133,461	)		(440	)		—			(133,901	)
General and administrative expenses		(22,696	)		(41,359	)		(22,570	)		(16,345	)		(102,970	)		(1,876	)		—			(104,846	)
Other income (loss)		1,199			216			—			528			1,943			(71	)		—			1,872

Underwriting income	$	44,586		$	49,409		$	4,770		$	18,121		$	116,886			n/a			—			n/a
Net investment income																	37,701			123,677			161,378
Net realized and unrealized gains (losses) on investments																	7,377			(330	)		7,047
Net impairment losses recognized in earnings																				(871	)		(871	)
Corporate other income																				74			74
Interest expense																				(20,409	)		(20,409	)
Net foreign exchange losses																				(267	)		(267	)
Merger and acquisition expenses																				49,276			49,276
Corporate general and administrative expenses																				(38,981	)		(38,981	)

(Loss) income before taxes																$	(1,207	)	$	112,169		$	227,848

Loss ratio [a]		60.6	%		57.7	%		61.6	%		46.4	%		57.5	%
Acquisition cost ratio [b]		1.1	%		21.4	%		16.0	%		19.5	%		16.1	%
General and adminstrative expense ratio [c]		13.2	%		9.5	%		18.5	%		16.5	%		12.4	%

Combined ratio [d]		74.8	%		88.7	%		96.1	%		82.3	%		86.1	%

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

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned.

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned.

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

[e]	Insurance and U.S. specialty segment amounts for the comparative 2010 periods have been reclassified to conform with the current period’s presentation.

Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL PREMIUM DATA–NINE MONTHS ENDED SEPTEMBER 30, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)

Gross Premiums Written by Type of Risk:


		Nine Months Ended September 30, 2011								Nine Months Ended September 30, 2010
		Gross Premiums Written		Percentage of Total Gross Premiums Written			Movement on Prior Year Period			Gross Premiums Written		Percentage of Total Gross Premiums Written
Property & Casualty:
Insurance [a]:
Aviation	S	$	11,966		0.8	%		(30.5	%)	$	17,211		1.6	%
Excess Liability	L		92,942		5.9	%		7.8	%		86,212		7.9	%
Professional Liability	L		132,302		8.4	%		0.3	%		131,852		12.0	%
Property	S		61,313		3.9	%		20.0	%		51,101		4.7	%

			298,523		18.9	%		4.2	%		286,376		26.1	%
Reinsurance [b]:
Agriculture	S		30,496		1.9	%		(0.4	%)		30,628		2.8	%
Auto	S		79,259		5.0	%		n/m			10,317		0.9	%
Aviation	S		15,654		1.0	%		(45.4	%)		28,696		2.6	%
Credit/ Surety	S		33,098		2.1	%		n/m			1,078		0.1	%
General Casualty	L		60,862		3.9	%		98.3	%		30,699		2.8	%
Marine & Energy	S		20,605		1.3	%		14.9	%		17,930		1.6	%
Medical Malpractice	L		35,672		2.3	%		12.0	%		31,837		2.9	%
Other	S		3,318		0.2	%		46.6	%		2,264		0.2	%
Professional Liability	L		139,221		8.8	%		70.0	%		81,889		7.5	%
Property	S		300,757		19.1	%		112.0	%		141,850		13.0	%
Whole Account	S/L		33,392		2.1	%		n/m			4,703		0.4	%
Workers’ Compensation	L		28,224		1.8	%		70.6	%		16,542		1.5	%

			780,558		49.5	%		95.9	%		398,433		36.4	%
U.S. Specialty [a]:
General Liability	L		57,395		3.6	%		(6.3	%)		61,223		5.6	%
Marine	S		64,687		4.1	%		30.2	%		49,696		4.5	%
Professional Liability	L		13,668		0.9	%		91.5	%		7,136		0.7	%
Property	S		106,245		6.7	%		(4.1	%)		110,818		10.1	%

			241,995		15.3	%		5.7	%		228,873		20.9	%
Alterra at Lloyd’s:
Accident & Health	S		31,447		2.0	%		24.0	%		25,351		2.3	%
Aviation	S		7,707		0.5	%		(29.4	%)		10,914		1.0	%
Financial Institutions	L		19,068		1.2	%		0.0	%		19,064		1.7	%
International Casualty	L		50,351		3.2	%		110.1	%		23,961		2.2	%
Professional Liability	L		18,828		1.2	%		22.4	%		15,387		1.4	%
Property	S		126,070		8.0	%		58.4	%		79,607		7.3	%
Surety	S		1,349		0.1	%		(69.1	%)		4,369		0.4	%

			254,820		16.1	%		42.6	%		178,653		16.3	%

Aggregate Property & Casualty		$	1,575,896		99.9	%		44.3	%	$	1,092,335		99.7	%

Life & Annuity:
Annuity		$	1,056		0.1	%		n/m		$	6		0.0	%
Life			1,131		0.1	%		(62.2	%)		2,992		0.3	%

Aggregate Life & Annuity		$	2,187		0.1	%		(27.1	%)	$	2,998		0.3	%

Aggregate Property & Casualty and Life & Annuity		$	1,578,083		100.0	%		44.1	%	$	1,095,333		100.0	%


S = Short tail lines		$	910,667		57.8	%				$	584,182		53.5	%
L = Long tail lines			665,229		42.2	%					508,153		46.5	%

Aggregate Property & Casualty		$	1,575,896							$	1,092,335

[a]	Insurance and U.S. specialty segment amounts for the comparative 2010 periods have been reclassified to conform with the current period’s presentation.

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

Percentage totals may not add due to rounding.

n/m Not meaningful.

ALTERRA CAPITAL HOLDINGS LIMITED

NON-GAAP FINANCIAL MEASURE RECONCILIATIONS (Unaudited)

Net Operating Income and Net Operating Income per Diluted Share

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011		2010
Net income before tax	$	52,813		$	83,695		$	31,734	$	227,848
Net realized and unrealized losses (gains) on non-hedge fund investments, before tax [a]		1,164			(10,440	)		28,427		2,692
Foreign exchange (gains) losses, before tax		(147	)		3,353			2,065		267
Merger and acquisition expenses, before tax		—			550			—		(49,276	)

Net operating income before tax	$	53,830		$	77,158		$	62,226	$	181,531

Net income	$	48,386		$	82,837		$	34,334	$	222,665
Net realized and unrealized losses (gains) on non-hedge fund investments, net of tax [a]		1,807			(10,104	)		29,120		2,672
Foreign exchange (gains) losses, net of tax		(111	)		2,758			1,461		780
Merger and acquisition expenses, net of tax		—			550			—		(50,621	)

Net operating income	$	50,082		$	76,041		$	64,915	$	175,496

Net income per diluted share	$	0.46		$	0.70		$	0.32	$	2.50
Net realized and unrealized losses (gains) on non-hedge fund investments, net of tax [a]		0.02			(0.08	)		0.27		0.03
Foreign exchange losses, net of tax		—			0.02			0.01		0.01
Merger and acquisition expenses, net of tax		—			—			—		(0.57	)

Net operating income per diluted share	$	0.47		$	0.64		$	0.61	$	1.97

Weighted average shares outstanding - basic		104,830,300			117,200,505			105,866,771		88,253,609

Weighted average shares outstanding - diluted		105,665,282			117,957,942			107,092,882		89,001,515

[a]

Net realized and unrealized (gains) losses 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, earnings from equity method investments and changes in fair value of investment derivatives, catastrophe bonds and structured deposits.

Per share totals may not add due to rounding.

Annualized Net Operating Return on Average Shareholders’ Equity

(Expressed in thousands of United States Dollars)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net income	$	48,386		$	82,837		$	34,334		$	222,665
Annualized net income		193,544			331,348			45,779			296,887
Net operating income	$	50,082		$	76,041		$	64,915		$	175,496
Annualized net operating income		200,328			304,164			86,553			233,995
Average shareholders’ equity [b]	$	2,818,910		$	2,981,752		$	2,799,260		$	2,297,438
Annualized return on average shareholders’ equity		6.9	%		11.1	%		1.6	%		12.9	%
Annualized net operating return on average shareholders’ equity		7.1	%		10.2	%		3.1	%		10.2	%

[b]	Average shareholders’ equity is computed as the average of the quarterly average shareholders’ equity balances. The average for the nine months ended September 30, 2010 has been weighted to include Harbor Point Limited from May 12, 2010.

Diluted Tangible Book Value Per Share

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


	September 30, 2011		December 31, 2010
Shareholders’ equity	$	2,844,738	$	2,918,270
Goodwill and intangible assets		56,652		59,076

Tangible book value	$	2,788,086	$	2,859,194

Diluted shares outstanding		104,665,209		112,290,968
Diluted tangible book value per share	$	26.64	$	25.46

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL INVESTMENT DATA– SEPTEMBER 30, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)


Type of Investment	As of September 30, 2011		Investment Distribution			As of December 31, 2010		Investment Distribution
Cash and cash equivalents	$	869,975		10.9	%	$	905,606		11.5	%

U.S. government and agencies		856,923		10.7	%		995,546		12.7	%
Non-U.S. governments		185,283		2.3	%		79,111		1.0	%
Corporate securities		2,781,212		34.8	%		2,735,366		34.8	%
Municipal securities		245,427		3.1	%		238,014		3.0	%
Asset-backed securities		240,584		3.0	%		86,937		1.1	%
Residential mortgage-backed securities		1,222,528		15.3	%		1,168,390		14.9	%
Commercial mortgage-backed securities		358,665		4.5	%		334,151		4.3	%

Fixed maturities at fair value	$	5,890,622		73.6	%	$	5,637,515		71.7	%

U.S. government and agencies	$	29,697		0.4	%	$	29,687		0.4	%
Non-U.S. governments		539,409		6.7	%		538,274		6.8	%
Corporate securities		356,810		4.5	%		371,143		4.7	%
Asset-backed securities		1,000		0.0	%		1,000		0.0	%

Fixed maturities at amortized cost	$	926,916		11.6	%	$	940,104		12.0	%

Other investments	$	311,633		3.9	%	$	378,128		4.8	%

Total invested assets	$	7,999,146		100.0	%	$	7,861,353		100.0	%


Credit Rating	As of September 30, 2011		Ratings Distribution			As of December 31, 2010		Ratings Distribution
U.S. government and agencies [a]	$	1,971,023		28.9	%	$	2,060,116		31.3	%
AAA		1,045,128		15.3	%		1,076,680		16.4	%
AA		891,470		13.1	%		657,867		10.0	%
A		1,393,419		20.4	%		1,353,945		20.6	%
BBB		253,442		3.7	%		226,849		3.4	%
BB		78,711		1.2	%		32,021		0.5	%
B		129,293		1.9	%		138,703		2.1	%
CCC or lower		51,226		0.8	%		45,469		0.7	%
Not rated		76,910		1.1	%		45,865		0.7	%

Fixed maturities at fair value	$	5,890,622		86.4	%	$	5,637,515		85.7	%

U.S. government and agencies	$	29,697		0.4	%	$	29,687		0.5	%
AAA		641,925		9.4	%		641,437		9.8	%
AA		110,497		1.6	%		113,140		1.7	%
A		124,734		1.8	%		141,683		2.2	%
BBB		20,063		0.3	%		12,744		0.2	%
Not rated		—		—			1,413		0.0	%

Fixed maturities at amortized cost	$	926,916		13.6	%	$	940,104		14.3	%

Total fixed maturities	$	6,817,538		100.0	%	$	6,577,619		100.0	%

[a]	Included within U.S. government and agencies are agency-issued residential mortgage-backed securities with a fair value of $1,114,100 (December 31, 2010: $1,064,570).

Percentage totals may not add due to rounding.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net investment income	$	60,335		$	59,711		$	177,766		$	161,378

Realized and unrealized gains (losses) on trading fixed maturities		1,663			883			1,268			(583	)
Net realized gains on available for sale fixed maturities		6,096			6,395			9,519			9,658
(Decrease) increase in fair value of hedge funds		(7,669	)		4,820			(6,380	)		8,868
(Decrease) increase in fair value of non-hedge fund other investments		(8,062	)		3,313			(36,971	)		(10,896	)

Net realized and unrealized (losses) gains on investments	$	(7,972	)	$	15,411		$	(32,564	)	$	7,047

Net impairment losses recognized in earnings	$	(861	)	$	(151	)	$	(2,243	)	$	(871	)

Contacts

Susan Spivak Bernstein, 1-212-898-6640

Senior Vice President

susan.spivak@alterra-bm.com

Kekst and Company

Peter Hill or Melissa Sheer, 1-212-521-4800

peter-hill@kekst.com / melissa-sheer@kekst.com

ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED, ANNOUNCING FINANCIAL RESULTS - November 1, 2011

Attached files