ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED

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8-K - FORM 8-K - ALTERRA CAPITAL HOLDINGS Ltd	d297417d8k.htm
EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT - ALTERRA CAPITAL HOLDINGS Ltd	d297417dex992.htm
EX-99.3 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED - ALTERRA CAPITAL HOLDINGS Ltd	d297417dex993.htm

Exhibit 99.1

ALTERRA CAPITAL REPORTS FOURTH QUARTER AND YEAR END 2011 RESULTS

Net Operating Income of $0.91 per Diluted Share in 2011

Diluted Book Value per Share Growth before Dividends of 5.5%

HAMILTON, BERMUDA, February 8, 2012—Alterra Capital Holdings Limited (NASDAQ: ALTE; BSX: ALTE.BH) (“Alterra”) today reported net income of $30.9 million, or $0.30 per diluted share, for the fourth quarter of 2011, compared to net income of $79.7 million, or $0.69 per diluted share, for the same quarter of 2010.

Net operating income for the fourth quarter of 2011 was $31.7 million, or $0.30 per diluted share, compared to net operating income of $76.2 million, or $0.66 per diluted share, for the same quarter of 2010. Annualized net operating return on average shareholders’ equity for the fourth quarter of 2011 was 4.5%.

For the year ended December 31, 2011, Alterra reported net income of $65.3 million, or $0.61 per diluted share, compared to net income of $302.3 million, or $3.17 per diluted share, in 2010. Net operating income for the year ended December 31, 2011 was $96.6 million, or $0.91 per diluted share, compared to net operating income of $251.7 million, or $2.64 per diluted share, in 2010. Net operating return on average shareholders’ equity for the year ended December 31, 2011 was 3.4%.

W. Marston (Marty) Becker, President and Chief Executive Officer of Alterra, said: “We are pleased with Alterra’s relative performance in 2011. We have reported positive operating income and a positive return on equity. Importantly, we have grown our book value per share over the year. Considering the record level of industry property catastrophe losses in 2011, we believe our results highlight the benefits of our diversified underwriting strategy, measured cat risk appetite and sophisticated risk management discipline. We have worked hard these past few years to build a global organization with a geographic and product footprint that can meet the needs of our clients and enable us to capture opportunity. As a result, with the industry apparently on the cusp of change, we believe Alterra is particularly well positioned to take advantage of the expected improvement in prices.”

Fourth quarter 2011 results for Alterra include:

•

Property and casualty gross premiums written of $324.8 million, representing an increase of $11.4 million, or 3.6%; net premiums written of $217.8 million, representing a decrease of $18.2 million, or 7.7%; and net premiums earned of $348.1 million, representing an increase of $7.3 million, or 2.1%; each as compared to the same quarter of 2010;

•

A combined ratio on property and casualty business of 97.4% compared to 84.8% for the same quarter of 2010;

•

Property catastrophe event and significant per-risk net losses of $55.5 million, net of reinstatement premiums, compared to $13.0 million in the same quarter of 2010. Losses net of reinsurance and reinstatements include $30.0 million for natural disasters during the fourth quarter of 2011. The remainder of the net losses relate to increased loss estimates on property catastrophe events from the first nine months of the year;

•

Net favorable development on prior years’ loss reserves of $43.0 million, or 12.3 combined ratio points, compared to $28.0 million, or 8.2 combined ratio points, in the same quarter of 2010; and

•

Net investment income of $57.1 million compared to $61.1 million in the same quarter of 2010, a decrease of 6.5%.

Gross premiums written from property and casualty underwriting for the fourth quarter of 2011 were $324.8 million, generated by the segments as follows: insurance - $111.8 million, a decrease of $1.5 million, or 1.3%; reinsurance - $89.2 million, a decrease of $21.5 million, or 19.4%; U.S. specialty - $88.2 million, an increase of $22.6 million, or 34.4%; and Alterra at Lloyd’s - $35.7 million, an increase of $11.7 million, or 49.0%; each as compared to the same quarter of 2010.

Combined ratios for the fourth quarter of 2011 by segment were 55.3% for insurance, 81.6% for reinsurance, 117.4% for U.S. specialty and 193.1% for Alterra at Lloyd’s.

Results for the year ended December 31, 2011 include:

•

Property and casualty gross premiums written of $1,900.7 million, representing an increase of $494.9 million, or 35.2%; net premiums written of $1,429.0 million, representing an increase of $394.0 million, or 38.1%; and net premiums earned of $1,422.0 million, representing an increase of $254.0 million, or 21.8%; each as compared to 2010;

•

A combined ratio on property and casualty business of 98.2% compared to 85.7% in 2010;

•

Property catastrophe event and significant per-risk net losses of $253.4 million, net of reinstatement premiums, compared to $54.9 million in 2010. Property catastrophe losses principally affected the reinsurance and Alterra at Lloyd’s segments;

•

Net favorable development on prior years’ loss reserves of $153.3 million, or 10.8 combined ratio points, compared to $105.5 million, or 9.0 combined ratio points, in 2010;

•

Net investment income of $234.8 million compared to $222.5 million in 2010, an increase of 5.6%; and

•

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

Gross premiums written from property and casualty underwriting for the year ended December 31, 2011 were $1,900.7 million, generated by the segments as follows: insurance - $410.3 million, an increase of $10.7 million, or 2.7%; reinsurance - $869.7 million, an increase of $360.7 million, or 70.8%; U.S. specialty - $330.2 million, an increase of $35.7 million, or 12.1%; and Alterra at Lloyd’s - $290.5 million, an increase of $87.9 million, or 43.4%; each as compared to 2010.

Combined ratios for the year ended December 31, 2011 by segment were 68.2% for insurance, 95.8% for reinsurance, 104.8% for U.S. specialty and 135.4% for Alterra at Lloyd’s.

Alterra’s 2010 results of operations reflect the impact of the May 12, 2010 merger with Harbor Point Limited. Accordingly, a comparison of Alterra’s gross premiums written, net premiums written and other results of operations for the current and prior year 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 fourth quarter financial supplement available on Alterra’s website at www.alterracap.com.

Balance Sheet

Total invested assets, including cash and cash equivalents, were $7,814.7 million as of December 31, 2011, a decrease of $46.6 million from December 31, 2010. As of December 31, 2011, 94.4% of the fixed maturities portfolio (by carrying value) was investment-grade, a decrease from 96.0% as of December 31, 2010. As of December 31, 2011, the weighted average book yield of Alterra’s cash and fixed maturities portfolio was 3.46% and the weighted average duration was 4.1 years.

Under a Board-approved share repurchase authorization, Alterra repurchased 2,362,113 common shares during the fourth quarter of 2011 at an average price of $22.45 per share for a total of $53.0 million. Share repurchases under the Board-approved share repurchase authorization for the year ended December 31, 2011 were 10,305,705 common shares at an average price of $21.67 per share for a total of $223.3 million. As of December 31, 2011, $104.4 million remained under the Board-approved share repurchase authorization.

Shareholders’ equity was $2,809.2 million as of December 31, 2011, a decrease of 3.7% from December 31, 2010. Diluted book value per share as of December 31, 2011 was $26.91. Including dividends declared during 2011, diluted book value per share growth in 2011 was 5.5%.

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

Alterra will host a conference call on Thursday, February 9, 2012 at 10:00 am (EDT) to discuss these results and related matters. The conference call can be accessed via telephone by dialing 1-888-679-8040 (toll-free U.S.) or 1-617-213-4851 (international) and using access code 96825658. 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)


	December 31, 2011		December 31, 2010
	(unaudited)
ASSETS
Cash and cash equivalents	$	922,844	$	905,606
Fixed maturities, trading at fair value		229,206		244,872
Fixed maturities, available for sale at fair value		5,501,925		5,392,643
Fixed maturities, held to maturity at amortized cost (fair value $1,011,493)		874,259		940,104
Other investments, at fair value		286,515		378,128
Accrued interest income		71,322		75,414
Premiums receivable		715,154		588,537
Losses and benefits recoverable from reinsurers		1,068,119		956,115
Deferred acquisition costs		145,850		111,901
Prepaid reinsurance premiums		212,238		149,252
Trades pending settlement		22,887		32,393
Goodwill and intangible assets		56,111		59,076
Other assets		79,417		83,247

Total assets	$	10,185,847	$	9,917,288

LIABILITIES
Property and casualty losses	$	4,216,538	$	3,906,134
Life and annuity benefits		1,190,697		1,275,580
Deposit liabilities		151,035		147,612
Funds withheld from reinsurers		112,469		121,107
Unearned property and casualty premiums		1,020,639		905,487
Reinsurance balances payable		134,354		102,942
Accounts payable and accrued expenses		110,380		99,680
Senior notes		440,500		440,476

Total liabilities		7,376,612		6,999,018

SHAREHOLDERS’ EQUITY
Common shares (par value $1.00)
102,101,950 (2010 - 110,963,160) shares issued and outstanding		102,102		110,963
Additional paid-in capital		1,847,034		2,026,045
Accumulated other comprehensive income		166,957		98,946
Retained earnings		693,142		682,316

Total shareholders’ equity		2,809,235		2,918,270

Total liabilities and shareholders equity	$	10,185,847	$	9,917,288

Book value per share	$	27.51	$	26.30

Diluted book value per share	$	26.91	$	25.99

Diluted tangible book value per share [a]	$	26.37	$	25.46

Diluted shares outstanding		104,406,779		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 December 31,						Year Ended December 31,
	2011			2010			2011			2010
REVENUES

Gross premiums written	$	325,983		$	315,398		$	1,904,066		$	1,410,731
Reinsurance premiums ceded		(107,203	)		(77,617	)		(472,077	)		(371,163	)

Net premiums written	$	218,780		$	237,781		$	1,431,989		$	1,039,568

Earned premiums	$	460,636		$	445,683		$	1,845,837		$	1,578,647
Earned premiums ceded		(111,532	)		(103,129	)		(420,863	)		(406,161	)

Net premiums earned		349,104			342,554			1,424,974			1,172,486
Net investment income		57,080			61,080			234,846			222,458
Net realized and unrealized (losses) gains on investments		(5,775	)		9,825			(38,339	)		16,872
Total other-than-temporary impairment losses		(703	)		(3,918	)		(2,706	)		(5,873	)
Portion of loss recognized in other comprehensive income (loss), before taxes		1			2,144			(239	)		3,228

Net impairment losses recognized in earnings		(702	)		(1,774	)		(2,945	)		(2,645	)
Other income		2,017			2,862			5,396			4,808

Total revenues		401,724			414,547			1,623,932			1,413,979

LOSSES AND EXPENSES
Net losses and loss expenses		231,533			179,047			945,593			654,841
Claims and policy benefits		14,564			18,551			59,382			65,213
Acquisition costs		64,380			53,563			261,102			187,464
Interest expense		13,296			7,866			43,688			28,275
Net foreign exchange (gains) losses		(753	)		(382	)		1,312			(115	)
Merger and acquisition expenses		—			500			—			(48,776	)
General and administrative expenses		54,657			76,759			257,074			220,586

Total losses and expenses		377,677			335,904			1,568,151			1,107,488

INCOME BEFORE TAXES		24,047			78,643			55,781			306,491
Income tax (benefit) expense		(6,901	)		(1,027	)		(9,501	)		4,156

NET INCOME [a]		30,948			79,670			65,282			302,335
Change in net unrealized gains and losses on fixed maturities, net of tax		(3,670	)		(87,633	)		86,104			81,406
Foreign currency translation adjustment		(2,398	)		(3,746	)		(18,093	)		(7,891	)

COMPREHENSIVE INCOME (LOSS) [a]	$	24,880		$	(11,709	)	$	133,293		$	375,850

Net income per share	$	0.30		$	0.70		$	0.62		$	3.19

Net income per diluted share	$	0.30		$	0.69		$	0.61		$	3.17

Net operating income per diluted share [b]	$	0.30		$	0.66		$	0.91		$	2.64

Weighted average shares outstanding - basic		103,323,377			113,968,287			105,249,683			94,682,279

Weighted average shares outstanding - diluted		104,672,891			114,831,467			106,502,893			95,459,375

[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)


	Year Ended December 31,
	2011			2010
Common shares
Balance, beginning of year	$	110,963		$	55,867
Issuance of common shares, net		1,529			65,384
Repurchase of common shares		(10,390	)		(10,288	)

Balance, end of year		102,102			110,963

Additional paid-in capital
Balance, beginning of year		2,026,045			752,309
Issuance of common shares, net		2,480			1,419,442
Stock based compensation expense		33,208			51,769
Repurchase of common shares		(214,699	)		(197,475	)

Balance, end of year		1,847,034			2,026,045

Accumulated other comprehensive income
Unrealized holding gains (losses) on investments:
Balance, beginning of year		118,197			36,791
Holding gains on available for sale securities arising in period [a]		97,044			99,603
Net realized gains on available for sale securities included in net income [a]		(11,179	)		(14,969	)
Portion of other-than-temporary impairment losses recognised in other comprehensive income [a]		239			(3,228	)

Balance, end of year		204,301			118,197
Cumulative foreign currency translation adjustment:
Balance, beginning of year		(19,251	)		(11,360	)
Foreign currency translation adjustments		(18,093	)		(7,891	)

Balance, end of year		(37,344	)		(19,251	)

Total accumulated other comprehensive income		166,957			98,946

Retained earnings
Balance, beginning of year		682,316			731,026
Net income		65,282			302,335
Dividends		(54,456	)		(351,045	)

Balance, end of year		693,142			682,316

Total shareholders’ equity	$	2,809,235		$	2,918,270

[a]	Net of tax

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Expressed in thousands of United States Dollars)


	Year Ended December 31,
	2011			2010
OPERATING ACTIVITIES
Net income	$	65,282		$	302,335
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		33,208			51,769
Amortization of premium on fixed maturities		23,562			19,033
Accretion of deposit liabilities		9,298			6,289
Net realized and unrealized losses (gains) on investments		38,339			(16,872	)
Net impairment losses recognized in earnings		2,945			2,645
Negative goodwill gain		—			(95,788	)
Changes in:
Accrued interest income		4,079			(2,618	)
Premiums receivable		(128,754	)		342,630
Losses and benefits recoverable from reinsurers		(114,759	)		9,751
Deferred acquisition costs		(34,591	)		(43,716	)
Prepaid reinsurance premiums		(63,564	)		34,695
Other assets		(1,476	)		(5,495	)
Property and casualty losses		308,587			(105,958	)
Life and annuity benefits		(59,010	)		(32,906	)
Funds withheld from reinsurers		(8,680	)		(18,962	)
Unearned property and casualty premiums		118,401			(98,267	)
Reinsurance balances payable		31,931			(47,209	)
Accounts payable and accrued expenses		10,769			6,941

Cash provided by operating activities		235,567			308,297

INVESTING ACTIVITIES
Purchases of available for sale securities		(2,317,677	)		(2,419,091	)
Sales of available for sale securities		1,311,423			1,243,263
Redemptions/maturities of available for sale securities		965,974			953,552
Purchases of trading securities		(76,355	)		(103,067	)
Sales of trading securities		24,563			27,207
Redemptions/maturities of trading securities		68,848			54,010
Purchases of held to maturity securities		(2,580	)		(27,953	)
Redemptions/maturities of held to maturity securities		45,713			32,354
Net purchases/sales of other investments		54,017			110,849
Acquisition of subsidiary, net of cash acquired		—			446,819

Cash provided by investing activities		73,926			317,943

FINANCING ACTIVITIES
Net proceeds from issuance of common shares		4,009			1,478
Repurchase of common shares		(225,089	)		(207,764	)
Net proceeds from issuance of senior notes		—			349,997
Net repayments of bank loans		—			(200,000	)
Dividends paid		(54,456	)		(349,495	)
Additions to deposit liabilities		1,061			3,093
Payment of deposit liabilities		(6,733	)		(14,336	)

Cash used in financing activities		(281,208	)		(417,027	)

Effect of exchange rate changes on foreign currency cash and cash equivalents		(11,047	)		(5,885	)
Net increase in cash and cash equivalents		17,238			203,328
Cash and cash equivalents, beginning of year		905,606			702,278

CASH AND CASH EQUIVALENTS, END OF YEAR	$	922,844		$	905,606

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid totaled $28,583 and $8,657 for the years ended December 31, 2011 and 2010, respectively.

Income taxes paid totaled $2,049 and $3,889 for the years ended December 31, 2011 and 2010, respectively.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED DECEMBER 31, 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	$	111,758		$	89,151		$	88,181		$	35,724		$	324,814		$	1,169		$	—		$	325,983
Reinsurance premiums ceded		(57,703	)		(1,718	)		(37,912	)		(9,716	)		(107,049	)		(154	)		—			(107,203	)

Net premiums written	$	54,055		$	87,433		$	50,269		$	26,008		$	217,765		$	1,015		$	—		$	218,780

Earned premiums	$	100,908		$	217,141		$	80,217		$	61,201		$	459,467		$	1,169		$	—		$	460,636
Earned premiums ceded		(47,084	)		(19,038	)		(29,821	)		(15,435	)		(111,378	)		(154	)		—			(111,532	)

Net premiums earned		53,824			198,103			50,396			45,766			348,089			1,015			—			349,104
Net losses and loss expenses		(18,446	)		(101,721	)		(41,835	)		(69,531	)		(231,533	)		—			—			(231,533	)
Claims and policy benefits		—			—			—			—			—			(14,564	)		—			(14,564	)
Acquisition costs		(1,161	)		(44,450	)		(8,272	)		(10,366	)		(64,249	)		(131	)		—			(64,380	)
General and administrative expenses		(10,178	)		(15,462	)		(9,073	)		(8,499	)		(43,212	)		(67	)		—			(43,279	)
Other income (loss)		(44	)		(100	)		—			851			707			413			—			1,120

Underwriting income (loss)	$	23,995		$	36,370		$	(8,784	)	$	(41,779	)	$	9,802			n/a			—			n/a
Net investment income																	11,515			45,565			57,080
Net realized and unrealized losses on investments																	(5,509	)		(266	)		(5,775	)
Net impairment losses recognized in earnings																				(702	)		(702	)
Corporate other income																				897			897
Interest expense																				(13,296	)		(13,296	)
Net foreign exchange gains																				753			753
Corporate general and administrative expenses																				(11,378	)		(11,378	)

(Loss) income before taxes																$	(7,328	)	$	21,573		$	24,047

Loss ratio [a]		34.3	%		51.3	%		83.0	%		151.9	%		66.5	%
Acquisition cost ratio [b]		2.2	%		22.4	%		16.4	%		22.7	%		18.5	%
General and adminstrative expense ratio [c]		18.9	%		7.8	%		18.0	%		18.6	%		12.4	%

Combined ratio [d]		55.3	%		81.6	%		117.4	%		193.1	%		97.4	%

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–YEAR ENDED DECEMBER 31, 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	$	410,281		$	869,709		$	330,176		$	290,544		$	1,900,710		$	3,356		$	—		$	1,904,066
Reinsurance premiums ceded		(200,146	)		(83,156	)		(123,874	)		(64,536	)		(471,712	)		(365	)		—			(472,077	)

Net premiums written	$	210,135		$	786,553		$	206,302		$	226,008		$	1,428,998		$	2,991		$	—		$	1,431,989

Earned premiums	$	398,503		$	894,017		$	302,625		$	247,336		$	1,842,481		$	3,356		$	—		$	1,845,837
Earned premiums ceded		(187,730	)		(70,027	)		(101,336	)		(61,405	)		(420,498	)		(365	)		—			(420,863	)

Net premiums earned		210,773			823,990			201,289			185,931			1,421,983			2,991			—			1,424,974
Net losses and loss expenses		(105,751	)		(527,955	)		(139,560	)		(172,327	)		(945,593	)		—			—			(945,593	)
Claims and policy benefits		—			—			—			—			—			(59,382	)		—			(59,382	)
Acquisition costs		(375	)		(182,257	)		(35,512	)		(42,401	)		(260,545	)		(557	)		—			(261,102	)
General and administrative expenses		(37,723	)		(79,330	)		(35,825	)		(36,993	)		(189,871	)		(648	)		—			(190,519	)
Other income (loss)		965			1,225			—			1,204			3,394			382			—			3,776

Underwriting income (loss)	$	67,889		$	35,673		$	(9,608	)	$	(64,586	)	$	29,368			n/a			—			n/a
Net investment income																	48,534			186,312			234,846
Net realized and unrealized losses on investments																	(10,408	)		(27,931	)		(38,339	)
Net impairment losses recognized in earnings																				(2,945	)		(2,945	)
Corporate other income																				1,620			1,620
Interest expense																				(43,688	)		(43,688	)
Net foreign exchange losses																				(1,312	)		(1,312	)
Corporate general and administrative expenses																				(66,555	)		(66,555	)

(Loss) income before taxes																$	(19,088	)	$	45,501		$	55,781

Loss ratio [a]		50.2	%		64.1	%		69.3	%		92.7	%		66.5	%
Acquisition cost ratio [b]		0.2	%		22.1	%		17.6	%		22.8	%		18.3	%
General and adminstrative expense ratio [c]		17.9	%		9.6	%		17.8	%		19.9	%		13.4	%

Combined ratio [d]		68.2	%		95.8	%		104.8	%		135.4	%		98.2	%

[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 DECEMBER 31, 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	$	113,236		$	110,620		$	65,625		$	23,980		$	313,461		$	1,937		$	—		$	315,398
Reinsurance premiums ceded		(56,728	)		(2,908	)		(15,956	)		(1,859	)		(77,451	)		(166	)		—			(77,617	)

Net premiums written	$	56,508		$	107,712		$	49,669		$	22,121		$	236,010		$	1,771		$	—		$	237,781

Earned premiums	$	106,169		$	215,261		$	74,683		$	47,633		$	443,746		$	1,937		$	—		$	445,683
Earned premiums ceded		(43,847	)		(21,082	)		(26,140	)		(11,894	)		(102,963	)		(166	)		—			(103,129	)

Net premiums earned		62,322			194,179			48,543			35,739			340,783			1,771			—			342,554
Net losses and loss expenses		(35,687	)		(97,639	)		(31,878	)		(13,843	)		(179,047	)		—			—			(179,047	)
Claims and policy benefits		—			—			—			—			—			(18,551	)		—			(18,551	)
Acquisition costs		(1,765	)		(38,406	)		(8,618	)		(4,853	)		(53,642	)		79			—			(53,563	)
General and administrative expenses		(11,812	)		(24,714	)		(7,552	)		(12,186	)		(56,264	)		(1,088	)		—			(57,352	)
Other income (loss)		68			(216	)		—			2,006			1,858			357			—			2,215

Underwriting income	$	13,126		$	33,204		$	495		$	6,863		$	53,688			n/a			—			n/a
Net investment income																	12,084			48,996			61,080
Net realized and unrealized gains on investments																	3,981			5,844			9,825
Net impairment losses recognized in earnings																				(1,774	)		(1,774	)
Corporate other income																				647			647
Interest expense																				(7,866	)		(7,866	)
Net foreign exchange gains																				382			382
Merger and acquisition expenses																				(500	)		(500	)
Corporate general and administrative expenses																				(19,407	)		(19,407	)

(Loss) income before taxes																$	(1,367	)	$	26,322		$	78,643

Loss ratio [a]		57.3	%		50.3	%		65.7	%		38.7	%		52.5	%
Acquisition cost ratio [b]		2.8	%		19.8	%		17.8	%		13.6	%		15.7	%
General and adminstrative expense ratio [c]		19.0	%		12.7	%		15.6	%		34.1	%		16.5	%

Combined ratio [d]		79.0	%		82.8	%		99.0	%		86.4	%		84.8	%

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–YEAR ENDED DECEMBER 31, 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	$	399,612		$	509,053		$	294,498		$	202,633		$	1,405,796		$	4,935		$	—		$	1,410,731
Reinsurance premiums ceded		(180,691	)		(64,131	)		(88,493	)		(37,448	)		(370,763	)		(400	)		—			(371,163	)

Net premiums written	$	218,921		$	444,922		$	206,005		$	165,185		$	1,035,033		$	4,535		$	—		$	1,039,568

Earned premiums	$	415,396		$	699,243		$	288,270		$	170,803		$	1,573,712		$	4,935		$	—		$	1,578,647
Earned premiums ceded		(180,684	)		(71,627	)		(117,657	)		(35,793	)		(405,761	)		(400	)		—			(406,161	)

Net premiums earned		234,712			627,616			170,613			135,010			1,167,951			4,535			—			1,172,486
Net losses and loss expenses		(140,108	)		(347,816	)		(107,052	)		(59,865	)		(654,841	)		—			—			(654,841	)
Claims and policy benefits		—			—			—			—			—			(65,213	)		—			(65,213	)
Acquisition costs		(3,651	)		(131,114	)		(28,174	)		(24,164	)		(187,103	)		(361	)		—			(187,464	)
General and administrative expenses		(34,508	)		(66,073	)		(30,122	)		(28,531	)		(159,234	)		(2,964	)		—			(162,198	)
Other income (loss)		1,267			—			—			2,534			3,801			286			—			4,087

Underwriting income	$	57,712		$	82,613		$	5,265		$	24,984		$	170,574			n/a			—			n/a
Net investment income																	49,785			172,673			222,458
Net realized and unrealized gains on investments																	11,358			5,514			16,872
Net impairment losses recognized in earnings																				(2,645	)		(2,645	)
Corporate other income																				721			721
Interest expense																				(28,275	)		(28,275	)
Net foreign exchange gains																				115			115
Merger and acquisition expenses																				48,776			48,776
Corporate general and administrative expenses																				(58,388	)		(58,388	)

(Loss) income before taxes																$	(2,574	)	$	138,491		$	306,491

Loss ratio [a]		59.7	%		55.4	%		62.7	%		44.3	%		56.1	%
Acquisition cost ratio [b]		1.6	%		20.9	%		16.5	%		17.9	%		16.0	%
General and adminstrative expense ratio [c]		14.7	%		10.5	%		17.7	%		21.1	%		13.6	%

Combined ratio [d]		76.0	%		86.8	%		96.9	%		83.4	%		85.7	%

[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–YEAR ENDED DECEMBER 31, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)

Gross Premiums Written by Type of Risk:


		Year Ended December 31, 2011					Movement on Prior Year Period			Year Ended December 31, 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	$	32,376		1.7	%		(18.8	%)	$	39,888		2.8	%
Excess Liability	L		116,606		6.1	%		2.7	%		113,573		8.1	%
Professional Liability	L		184,377		9.7	%		0.7	%		183,051		13.0	%
Property	S		76,922		4.0	%		21.9	%		63,100		4.5	%

			410,281		21.5	%		2.7	%		399,612		28.3	%
Reinsurance [b]:
Agriculture	S		30,682		1.6	%		5.0	%		29,222		2.1	%
Auto	S		99,807		5.2	%		n/m			32,902		2.3	%
Aviation	S		15,991		0.8	%		(48.9	%)		31,292		2.2	%
Credit/ Surety	S		34,916		1.8	%		n/m			2,196		0.2	%
General Casualty	L		73,814		3.9	%		52.6	%		48,357		3.4	%
Marine & Energy	S		24,012		1.3	%		46.6	%		16,381		1.2	%
Medical Malpractice	L		37,345		2.0	%		(27.3	%)		51,391		3.6	%
Other	S		3,137		0.2	%		12.7	%		2,784		0.2	%
Professional Liability	L		159,542		8.4	%		44.5	%		110,427		7.8	%
Property	S		319,684		16.8	%		115.8	%		148,146		10.5	%
Whole Account	S/L		35,800		1.9	%		n/m			5,129		0.4	%
Workers’ Compensation	L		34,979		1.8	%		13.5	%		30,826		2.2	%

			869,709		45.7	%		70.8	%		509,053		36.1	%
U.S. Specialty [a]:
General Liability	L		86,630		4.5	%		6.8	%		81,137		5.8	%
Marine	S		88,493		4.6	%		31.2	%		67,454		4.8	%
Professional Liability	L		17,673		0.9	%		167.7	%		6,602		0.5	%
Property	S		137,380		7.2	%		(1.4	%)		139,305		9.9	%

			330,176		17.3	%		12.1	%		294,498		20.9	%
Alterra at Lloyd’s:
Accident & Health	S		37,093		1.9	%		20.0	%		30,921		2.2	%
Aviation	S		13,269		0.7	%		(17.8	%)		16,138		1.1	%
Financial Institutions	L		27,205		1.4	%		39.9	%		19,448		1.4	%
International Casualty	L		52,425		2.8	%		100.3	%		26,174		1.9	%
Marine	S		1,493		0.1	%		n/m			—		0.0	%
Professional Liability	L		20,696		1.1	%		5.6	%		19,591		1.4	%
Property	S		132,068		6.9	%		54.4	%		85,553		6.1	%
Surety	S		6,295		0.3	%		30.9	%		4,808		0.3	%

			290,544		15.3	%		43.4	%		202,633		14.4	%

Aggregate Property & Casualty		$	1,900,710		99.8	%		35.2	%	$	1,405,796		99.7	%

Life & Annuity:
Annuity		$	1,826		0.1	%		60.9	%	$	1,135		0.1	%
Life			1,530		0.1	%		(59.7	%)		3,800		0.3	%

Aggregate Life & Annuity		$	3,356		0.2	%		(32.0	%)	$	4,935		0.3	%

Aggregate Property & Casualty and Life & Annuity		$	1,904,066		100.0	%		35.0	%	$	1,410,731		100.0	%


S = Short tail lines		$	1,071,518		56.4	%				$	712,655		50.7	%
L = Long tail lines			829,192		43.6	%					693,141		49.3	%

Aggregate Property & Casualty		$	1,900,710							$	1,405,796

[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 December 31,						Year Ended December 31,
	2011			2010			2011		2010
Net income before tax	$	24,047		$	78,643		$	55,781	$	306,491
Net realized and unrealized losses (gains) on non-hedge fund investments, before tax [a]		1,059			(2,627	)		29,486		65
Foreign exchange (gains) losses, before tax		(753	)		(382	)		1,312		(115	)
Merger and acquisition expenses, before tax		—			500			—		(48,776	)

Net operating income before tax	$	24,353		$	76,134		$	86,579	$	257,665

Net income	$	30,948		$	79,670		$	65,282	$	302,335
Net realized and unrealized losses (gains) on non-hedge fund investments, net of tax [a]		1,271			(3,537	)		30,391		(865	)
Foreign exchange (gains) losses, net of tax		(534	)		(417	)		927		363
Merger and acquisition expenses, net of tax		—			500			—		(50,121	)

Net operating income	$	31,685		$	76,216		$	96,600	$	251,712

Net income per diluted share	$	0.30		$	0.69		$	0.61	$	3.17
Net realized and unrealized losses (gains) on non-hedge fund investments, net of tax [a]		0.01			(0.03	)		0.29		(0.01	)
Foreign exchange (gains) losses, net of tax		(0.01	)		—			0.01		0.01
Merger and acquisition expenses, net of tax		—			—			—		(0.53	)

Net operating income per diluted share	$	0.30		$	0.66		$	0.91	$	2.64

Weighted average shares outstanding - basic		103,323,377			113,968,287			105,249,683		94,682,279

Weighted average shares outstanding - diluted		104,672,891			114,831,467			106,502,893		95,459,375

[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 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 December 31,						Year Ended December 31,
	2011			2010			2011			2010
Net income	$	30,948		$	79,670		$	65,282		$	302,335
Annualized net income		123,792			318,680			65,282			302,335
Net operating income	$	31,685		$	76,216		$	96,600		$	251,712
Annualized net operating income		126,740			304,864			96,600			251,712
Average shareholders’ equity [b]	$	2,826,987		$	2,977,404		$	2,806,191		$	2,467,429
Annualized return on average shareholders’ equity		4.4	%		10.7	%		2.3	%		12.3	%
Annualized net operating return on average shareholders’ equity		4.5	%		10.2	%		3.4	%		10.2	%

[b]	Average shareholders’ equity is computed as the average of the quarterly average shareholders’ equity balances. The average for the year ended December 31, 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)


	December 31, 2011		December 31, 2010
Shareholders’ equity	$	2,809,235	$	2,918,270
Goodwill and intangible assets		56,111		59,076

Tangible book value	$	2,753,124	$	2,859,194

Diluted shares outstanding		104,406,779		112,290,968
Diluted tangible book value per share	$	26.37	$	25.46

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL INVESTMENT DATA– DECEMBER 31, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)


Type of Investment	As of December 31, 2011		Investment Distribution			As of December 31, 2010		Investment Distribution
Cash and cash equivalents	$	922,844		11.8	%	$	905,606		11.5	%

U.S. government and agencies		751,806		9.6	%		995,546		12.7	%
Non-U.S. governments		164,621		2.1	%		79,111		1.0	%
Corporate securities		2,646,358		33.9	%		2,735,366		34.8	%
Municipal securities		263,007		3.4	%		238,014		3.0	%
Asset-backed securities		247,965		3.2	%		86,937		1.1	%
Residential mortgage-backed securities		1,296,277		16.6	%		1,168,390		14.9	%
Commercial mortgage-backed securities		361,097		4.6	%		334,151		4.3	%

Fixed maturities at fair value	$	5,731,131		73.3	%	$	5,637,515		71.7	%

U.S. government and agencies	$	29,201		0.4	%	$	29,687		0.4	%
Non-U.S. governments		524,449		6.7	%		538,274		6.8	%
Corporate securities		319,609		4.1	%		371,143		4.7	%
Asset-backed securities		1,000		0.0	%		1,000		0.0	%

Fixed maturities at amortized cost	$	874,259		11.2	%	$	940,104		12.0	%

Other investments	$	286,515		3.7	%	$	378,128		4.8	%

Total invested assets	$	7,814,749		100.0	%	$	7,861,353		100.0	%


Credit Rating	As of December 31, 2011		Ratings Distribution			As of December 31, 2010		Ratings Distribution
U.S. government and agencies [a]	$	1,869,405		28.3	%	$	2,060,116		31.3	%
AAA		948,861		14.4	%		1,076,680		16.4	%
AA		883,783		13.4	%		657,867		10.0	%
A		1,378,361		20.9	%		1,353,945		20.6	%
BBB		281,983		4.3	%		226,849		3.4	%
BB		84,803		1.3	%		32,021		0.5	%
B		131,159		2.0	%		138,703		2.1	%
CCC or lower		53,157		0.8	%		45,469		0.7	%
Not rated		99,619		1.5	%		45,865		0.7	%

Fixed maturities at fair value	$	5,731,131		86.8	%	$	5,637,515		85.7	%

U.S. government and agencies	$	29,201		0.4	%	$	29,687		0.5	%
AAA		619,832		9.4	%		641,437		9.8	%
AA		82,511		1.2	%		113,140		1.7	%
A		117,600		1.8	%		141,683		2.2	%
BBB		24,117		0.4	%		12,744		0.2	%
BB		998		0.0	%		—		—
Not rated		—		—			1,413		0.0	%

Fixed maturities at amortized cost	$	874,259		13.2	%	$	940,104		14.3	%

Total fixed maturities	$	6,605,390		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 $1,117,599 (December 31, 2010: $1,064,570).

Percentage totals may not add due to rounding.

		000000000			000000000			000000000			000000000
	Three Months Ended December 31,						Year Ended December 31,
	2011			2010			2011			2010
Net investment income	$	57,080		$	61,080		$	234,846		$	222,458

Realized and unrealized gains (losses) on trading fixed maturities		763			(3,893	)		2,031			(4,476	)
Net realized gains on available for sale fixed maturities		1,990			5,816			11,509			15,474
(Decrease) increase in fair value of hedge funds		(5,415	)		5,465			(11,795	)		14,333
(Decrease) increase in fair value of non-hedge fund other investments		(3,113	)		2,437			(40,084	)		(8,459	)

Net realized and unrealized (losses) gains on investments	$	(5,775	)	$	9,825		$	(38,339	)	$	16,872

Net impairment losses recognized in earnings	$	(702	)	$	(1,774	)	$	(2,945	)	$	(2,645	)

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 - February 8, 2012

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