Alterra Capital Q2 2011 Investor Financial Supplement

8/6/2019 Alterra Capital Q2 2011 Investor Financial Supplement

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ALTERRA CAPITAL HOLDINGS LIMITED

Investor Financial Supplement

Second Quarter 2011

(Unaudited)

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

Alterra Capital Holdings LimitedInvestors:Susan Spivak Bernstein, +1-212-898-6640orMedia:Kekst and CompanyPeter Hill or Melissa Sheer, +1-212-521-4800


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CONSOLIDATED UNDERWRITING RATIOS - THREE MONTHS ENDED JUNE 30, 2011 (Unaudited)

Insurance Reinsurance U.S. Specialty Alterra at Lloyd's Total

UNDERWRITING RATIOS

Loss ratio 54.7% 63.8% 64.1% 50.5% 60.7%

Acquisition cost ratio (0.7%) 22.5% 18.9% 23.1% 18.5%

General and administrative expense ratio 16.7% 11.6% 18.2% 20.2% 14.5%Combined ratio 70.8% 98.0% 101.1% 93.8% 93.7%

EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT

FAVORABLE / (UNFAVORABLE)

Loss ratio [a] 27.8% 12.1% 0.0% 21.0% 14.0%

NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT

UNDERWRITING RATIOS

Loss ratio 82.5% 75.9% 64.1% 71.5% 74.6%

Acquisition cost ratio (0.7%) 22.5% 18.9% 23.1% 18.5%


[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 JUNE 30, 2010 (Unaudited)

Insurance [b] Reinsurance U.S. Specialty [b] Alterra at Lloyd's Total

UNDERWRITING RATIOS

Loss ratio 64.2% 53.0% 60.6% 37.4% 54.6%

Acquisition cost ratio 1.4% 21.0% 20.7% 18.3% 16.6%




Loss ratio [a] 15.8% 7.4% 0.0% 9.3% 8.2%


UNDERWRITING RATIOS

Loss ratio 80.0% 60.4% 60.6% 46.6% 62.9%




[b] Insurance and U.S. Specialty segment amounts for the comparative 2010 period have been reclassified to conform with the current period's presentation.

Percentage totals may not add due to rounding.

Property & Casualty

Property & Casualty

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INSURANCE SEGMENT DATA (Unaudited)(Expressed in thousands of United States Dollars)

June 30, 2011 Mar. 31, 2011 Dec. 31, 2010 [a] Sept. 30, 2010 [a] June 30, 2010 [a] June 30, 2009 [a]

Gross premiums written 141,255$ 71,272$ 113,236$ 77,944$ 139,026$ 139,226$

Reinsurance premiums ceded (56,002) (43,246) (56,728) (36,875) (47,437) (47,972)

Net premiums written 85,253$ 28,026$ 56,508$ 41,069$ 91,589$ 91,254$

Earned premiums 97,296$ 98,944$ 106,169$ 102,640$ 104,841$ 105,576$

Earned premiums ceded (44,338) (44,730) (43,847) (42,796) (45,211) (51,129)

Net premiums earned 52,958 54,214 62,322 59,844 59,630 54,447

Net losses and loss expenses (28,992) (34,664) (35,687) (26,679) (38,296) (39,901)

Acquisition costs 361 (184) (1,765) (1,382) (821) 230

General and administrative expenses (8,859) (9,825) (11,812) (7,717) (8,132) (6,693)

Other income 139 812 68 1,108 97 219

Underwriting income 15,607$ 10,353$ 13,126$ 25,174$ 12,478$ 8,302$

Loss ratio 54.7% 63.9% 57.3% 44.6% 64.2% 73.3%

Acquisition cost ratio (0.7%) 0.3% 2.8% 2.3% 1.4% (0.4%)

General and administrative expense ratio 16.7% 18.1% 19.0% 12.9% 13.6% 12.3%Combined ratio 70.8% 82.4% 79.0% 59.8% 79.2% 85.2%

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

See page 34 for additional information.

FOR THE QUARTERS ENDED

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REINSURANCE SEGMENT DATA (Unaudited)(Expressed in thousands of United States Dollars)

June 30, 2011 Mar. 31, 2011 Dec. 31, 2010 Sept. 30, 2010 June 30, 2010 [a] June 30, 2009

Gross premiums written 248,754$ 375,020$ 110,620$ 124,004$ 119,578$ 95,196$

Reinsurance premiums ceded (28,247) (37,317) (2,908) (2,524) (13,348) (18,085)

Net premiums written 220,507$ 337,703$ 107,712$ 121,480$ 106,230$ 77,111$

Earned premiums 209,212$ 249,901$ 215,261$ 213,510$ 174,729$ 112,550$

Earned premiums ceded (12,305) (20,195) (21,082) (15,533) (19,054) (22,825)

Net premiums earned 196,907 229,706 194,179 197,977 155,675 89,725

Net losses and loss expenses (125,592) (186,885) (97,639) (117,671) (82,441) (57,813)

Acquisition costs (44,366) (49,143) (38,406) (45,069) (32,673) (15,734)

General and administrative expenses (22,937) (23,258) (24,714) (17,580) (14,820) (7,223)

Other income 548 - (216) 61 155 12

Underwriting income (loss) 4,560$ (29,580)$ 33,204$ 17,718$ 25,896$ 8,967$

Loss ratio 63.8% 81.4% 50.3% 59.4% 53.0% 64.4%

Acquisition cost ratio 22.5% 21.4% 19.8% 22.8% 21.0% 17.5%

General and administrative expense ratio 11.6% 10.1% 12.7% 8.9% 9.5% 8.1%

Combined ratio 98.0% 112.9% 82.8% 91.1% 83.5% 90.0%

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


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

(Expressed in thousands of United States D ollars)

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% 10.3% 8.3% 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.


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CONSOLIDATED UNDERWRITING RATIOS - SIX MONTHS ENDED JUNE 30, 2011 (Unaudited)

Insurance Reinsurance U.S. Specialty Alterra at Lloyd's Total

UNDERWRITING RATIOS

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 76.7% 106.0% 100.1% 126.9% 103.5%



Loss ratio [a] 20.5% 10.9% 0.0% 10.6% 10.9%


UNDERWRITING RATIOS

Loss ratio 80.0% 84.2% 63.8% 91.2% 81.7%

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 97.2% 116.9% 100.1% 137.5% 114.4%


CONSOLIDATED UNDERWRITING RATIOS - SIX MONTHS ENDED JUNE 30, 2010 (Unaudited)

Insurance [b] Reinsurance [c] U.S. Specialty [b] Alterra at Lloyd's Total

UNDERWRITING RATIOS

Loss ratio 69.1% 56.3% 61.3% 45.4% 58.6%Acquisition cost ratio 0.4% 20.2% 17.1% 18.7% 15.0%General and administrative expense ratio 13.3% 10.1% 18.6% 13.5% 12.6%Combined ratio 82.8% 86.6% 97.0% 77.6% 86.2%



Loss ratio [a] 13.3% 8.9% 1.0% 7.5% 8.4%


UNDERWRITING RATIOS

Loss ratio 82.3% 65.1% 62.3% 52.8% 67.1%Acquisition cost ratio 0.4% 20.2% 17.1% 18.7% 15.0%General and administrative expense ratio 13.3% 10.1% 18.6% 13.5% 12.6%Combined ratio 96.1% 95.5% 98.0% 85.1% 94.6%


[b] Insurance and U.S. Specialty segment amounts for the comparative 2010 period have been reclassified to conform with the current period's presentation.

[c] Includes the results for Harbor Point from May 12, 2010.Percentage totals may not add due to rounding.

Property & Casualty

Property & Casualty

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INSURANCE SEGMENT DATA (Unaudited)(Expressed in thousands of United States Dollars)

June 30, 2011 June 30, 2010 [a] June 30, 2009 [a] Dec. 31, 2010 [a] Dec. 31, 2009 [a]

Gross premiums written 212,527$ 208,432$ 230,232$ 399,612$ 447,340$

Reinsurance premiums ceded (99,248) (87,088) (104,192) (180,691) (218,633)

Net premiums written 113,279$ 121,344$ 126,040$ 218,921$ 228,707$

Earned premiums 196,240$ 206,587$ 211,216$ 415,396$ 434,147$

Earned premiums ceded (89,068) (94,041) (104,307) (180,684) (216,687)

Net premiums earned 107,172 112,546 106,909 234,712 217,460

Net losses and loss expenses (63,656) (77,742) (78,059) (140,108) (140,403)

Acquisition costs 177 (504) 1,597 (3,651) 1,206

General and administrative expenses (18,684) (14,979) (12,767) (34,508) (27,927)

Other Income 951 91 1,435 1,267 1,620

Underwriting income 25,960$ 19,412$ 19,115$ 57,712$ 51,956$

Loss ratio 59.4% 69.1% 73.0% 59.7% 64.6%

Acquisition cost ratio (0.2%) 0.4% (1.5%) 1.6% (0.6%)

General and administration expense ratio 17.4% 13.3% 11.8% 14.6% 12.7%

Combined ratio 76.7% 82.8% 83.5% 76.0% 76.9%



FOR THE YEARS ENDEDFOR THE SIX MONTHS ENDED

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REINSURANCE SEGMENT DATA (Unaudited)(Expressed in thousands of United States Dollars)

June 30, 2011 June 30, 2010 [a] June 30, 2009 Dec. 31, 2010 [a] Dec. 31, 2009




Earned premiums 459,113$ 270,472$ 236,536$ 699,243$ 476,434$




Acquisition costs (93,509) (47,639) (33,197) (131,114) (71,074)


Other income 548 155 12 - 12

Underwriting (loss) income (25,020)$ 31,691$ 15,232$ 82,613$ 30,542$

Loss ratio 73.2% 56.3% 66.3% 55.4% 65.6%



Combined ratio 106.0% 86.6% 91.9% 86.8% 92.1%

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


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U.S. SPECIALTY SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)

June 30, 2011 June 30, 2010 [a] June 30, 2009 [a] Dec. 31, 2010 [a] Dec. 31, 2009 [a]




Earned premiums 147,017$ 140,250$ 109,966$ 288,270$ 239,613$






Other income - - (68) - (68)

Underwriting (loss) income (96)$ 2,255$ 413$ 5,265$ 374$

Loss ratio 63.8% 61.3% 58.3% 62.7% 60.4%



Combined ratio 100.1% 97.0% 98.7% 96.9% 99.5%




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ALTERRA AT LLOYD'S SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)

June 30, 2011 June 30, 2010 June 30, 2009 Dec. 31, 2010 Dec. 31, 2009




Earned premiums 128,535$ 77,746$ 64,664$ 170,803$ 125,000$






Other income 380 351 508 2,534 658

Underwriting (loss) income (24,751)$ 14,477$ 3,809$ 24,984$ 13,685$

Loss ratio 80.6% 45.4% 50.1% 44.3% 46.2%



Combined ratio 126.9% 77.6% 92.9% 83.4% 86.3%


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LIFE AND ANNUITY REINSURANCE SEGMENT DATA (Unaudited)(Expressed in thousands of United States Dollars)

June 30, 2011 June 30, 2010 June 30, 2009 Dec. 31, 2010 Dec. 31, 2009


Reinsurance premiums ceded (121) (132) (120) (400) (413)Net premiums written 1,244$ 1,533$ 41,500$ 4,535$ 43,342$

Earned premiums 1,365$ 1,665$ 41,620$ 4,935$ 43,755$

Earned premiums ceded (121) (132) (120) (400) (413)


Net investment income 24,888 25,519 24,483 49,785 50,993

Net realized and unrealized gains on investments 1,508 4,056 17,214 11,358 37,338

Other income (23) (28) - 286 (120)

Claims and policy benefits (30,280) (31,602) (69,739) (65,213) (101,093)

Acquisition costs (281) (269) (870) (361) (1,396)

General and administrative expenses (436) (1,299) (1,351) (2,964) (2,786)

Income (loss) before taxes (3,380)$ (2,090)$ 11,237$ (2,574)$ 26,278$


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INVESTMENT PORTFOLIO (Unaudited)(Expressed in thousands of United States Dollars)

Last Year Last LastAs of 3 Months to Date 12 months 60 months*

June 30, 2011

Cash and fixed maturities 7,602,541$ 2.04% 3.10% 4.29% 5.67%

Distressed securities 34,496$ 1.93% 2.36% 6.16% 5.85%Diversified arbitrage 22,532 (5.41%) (2.07%) 6.52% (3.85%)Emerging markets 4,961 (0.59%) 0.93% 5.15% 4.40%Event-driven arbitrage 26,696 0.83% (3.62%) (6.56%) 2.78%

Fixed income arbitrage - 0.00% 0.00% 0.00% 12.97%Fund of funds 44,154 0.71% 3.05% 8.75% 1.48%Global macro 49,213 (1.60%) (0.67%) 2.67% 5.72%

Long / short credit 9,821 (3.90%) (2.15%) 0.91% 4.21%Long / short equity 124,214 (0.11%) 2.84% 7.00% 6.50%

Opportunistic 1,699 (2.05%) (36.60%) (37.63%) (20.52%)

Hedge funds ** 317,786 (0.45%) 0.53% 3.48% 2.55%

Derivatives 456

Structured deposits 26,859Equity investments 5,092

Total other investments 350,193$

Total invested assets 7,952,734$

Hedge Fund Investment Return Data:

HFRI Fund of Funds Composite Index [a] (1.18%) (0.31%) 6.67% 1.53%

Hedge Fund Performance History 60 months ended June 30, 2011

Monthly performance 2011 2010 2009 2008 2007 2006

January 0.13% 0.79% 2.13% (1.37%) 1.28%

February 0.57% 0.17% 0.65% 1.83% 1.50%

March 0.29% 1.02% (0.76%) (2.58%) 1.90%

April 0.73% 0.88% (0.84%) (0.13%) 2.30%

May (0.28%) (0.73%) 2.45% 2.51% 2.59%

June (0.89%) (0.83%) 1.53% 0.93% 0.85%

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 0.84% 1.53% (4.85%) 4.15% 1.37%

November 0.40% 0.35% (1.75%) 0.10% 1.81%December 0.31% 0.77% (1.92%) (0.13%) 1.96%

Quarterly performance

Q1 0.98% 1.99% 2.00% (2.15%) 4.75%

Q2 (0.45%) (0.69%) 3.14% 3.33% 5.83%

Q3 1.35% 3.94% (13.03%) 1.18% (2.72%)

Q4 1.56% 2.66% (8.31%) 4.11% 5.22%

Period return 0.53% 4.25% 12.27% (19.38%) 16.78% 2.36%

Past performance should not be considered to be a reliable indicator of future performance.[a] As reported by HFRI as of August 1, 2011* Annualized

** Net of all fees

Periodic Rate of Return

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LARGEST 25 CORPORATE HOLDINGS (Unaudited)(Expressed in thousands of United States Dollars)

Amortized Fair

Issuer Cost Value

Bank of America Corp 67,068 68,365

General Electric 61,225 62,186

JP Morgan Chase & Co 51,863 53,648

Citigroup Inc 50,704 50,831

Wells Fargo & Co 47,575 48,762Morgan Stanley 44,468 45,990

Lloyds Banking Group plc 39,680 40,976

Credit Suisse Group 37,238 37,769

Pepsico Inc 35,899 37,337

BP plc 36,137 37,027

Novartis AG 33,051 34,476

AT&T Inc 33,056 34,192

Verizon Communications Inc 32,615 34,137

UBS AG 30,807 33,328

Goldman Sachs Group Inc 32,011 32,683

Pfizer Inc 26,964 28,281Berkshire Hathaway Inc 27,336 27,887

Conoco Philips 25,553 27,028

Hypo Real Estate Holding AG 26,087 26,239

Metlife Inc 25,301 26,164

Barclays plc 25,776 25,299

Wal-Mart Stores Inc 24,024 24,497

HSBC Holdings plc 23,961 24,470

Medtronic Inc. 22,518 23,176

Duke Energy Corp. 21,602 22,711

882,518$ 907,459$

As of June 30, 2011

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SHAREHOLDER RETURN ANALYSIS (Unaudited)(Expressed in thousands of United States Dollars, except per share and share amounts)

June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010 Dec. 31, 2010 Dec. 31, 2009

Income and Return on Equity:

Net income (loss) $ 32,635 $ 103,447 $ (14,052) $ 139,828 $ 302,335 $ 246,215

Net operating income $ 39,558 $ 58,774 $ 14,833 $ 99,455 $ 251,712 $ 208,907

Average shareholders' equity 2,758,138$ 2,321,687$ 2,789,435$ $ 1,955,281 2,467,429$ 1,398,872$

Annualized return on average shareholders' equity [a] 4.7% 17.8% (1.0%) 14.3% 12.3% 17.6%

Annualized net operating return on average shareholders' equity [a] 5.7% 10.1% 1.1% 10.2% 10.2% 14.9%

Book value and dividends per share:

Diluted book value per share $ 25.98 24.55$ $ 25.98 24.55$ 25.99$ 27.36$

Dividends paid per share 0.12$ 2.60$ 0.24$ 2.70$ 2.94$ 0.38$

Change in diluted book value per share 2.5% (11.9%) (0.0%) (10.3%) (5.0%) 21.8%

Dividend payout ratio [b] 0.5% 19.7% 0.9% 20.6% 22.4% 1.7%

Total return to shareholders [c] 3.0% 7.8% 0.8% 10.3% 17.4% 23.5%

[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.

[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.

FOR THE YEARS ENDEDFOR THE QUARTERS ENDED FOR THE SIX MONTHS ENDED

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BOOK VALUE PER SHARE (Unaudited)(Expressed in thousands of United States Dollars, except per share and share amounts)

As of June 30, 2011 As of Mar.31, 2011 As of Dec. 31, 2010

Price per share at period end 22.30$ 22.26$ 21.64$

Shareholders' equity 2,793,081$ 2,723,194$ 2,918,270$

Goodwill and intangible assets 58,094$ 58,585$ 59,076$

Tangible book value 2,734,987$ 2,664,609$ 2,859,194$

Basic common shares outstanding [a] 105,794,521 105,733,610 110,963,160

Add: unvested restricted stock units 247,179 247,179 167,971

Add: dilutive impact of warrants outstanding 1,334,909 1,346,672 1,036,442

Add: dilutive impact of options outstanding 123,881 134,901 123,395

Add: dilutive impact of employee stock purchase plan - 4,016 -

Diluted shares outstanding [b] 107,500,490 107,466,378 112,290,968

Basic book value per share 26.40$ 25.76$ 26.30$

Diluted book value per share 25.98$ 25.34$ 25.99$

Basic tangible book value per share 25.85$ 25.20$ 25.77$

Diluted tangible book value per share 25.44$ 24.79$ 25.46$

[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.

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Reclassified Segment Information

Selected Financial Information

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

Selected Financial Information

The following presentation is for informational purposes only

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Alterra Capital Q2 2011 Investor Financial Supplement

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Transcript of Alterra Capital Q2 2011 Investor Financial Supplement