ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT

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8-K - FORM 8-K - ALTERRA CAPITAL HOLDINGS Ltd	d297417d8k.htm
EX-99.1 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED - ALTERRA CAPITAL HOLDINGS Ltd	d297417dex991.htm
EX-99.3 - NEWS RELEASE OF ALTERRA CAPITAL HOLDINGS LIMITED - ALTERRA CAPITAL HOLDINGS Ltd	d297417dex993.htm

Exhibit 99.2

LOGO

ALTERRA CAPITAL HOLDINGS LIMITED

Investor Financial Supplement

Fourth Quarter 2011

(Unaudited)

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

Alterra Capital Holdings Limited

Investors:

Susan Spivak Bernstein, +1-212-898-6640

Media:

Kekst and Company

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

ALTERRA CAPITAL HOLDINGS LIMITED

Cautionary note regarding forward-looking information

This financial supplement may include forward-looking statements that reflect Alterra Capital Holdings Limited’s (“Alterra” or the “Company”) current views with respect to future events and financial performance. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” “may” and similar statements of a future or forward-looking nature identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are important factors that could cause actual results to differ materially from those indicated in such statements and you should not place undue reliance on any such statements.

These factors include, but are not limited to, the following: (1) the adequacy of loss reserves and the need to adjust such reserves as claims develop over time; (2) the failure of any of the loss limitation methods employed; (3) the effect of cyclical trends, including with respect to demand and pricing in the insurance and reinsurance markets; (4) changes in general economic conditions, including changes in capital and credit markets; (5) any lowering or loss of financial ratings; (6) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding expectations; (7) actions by competitors, including consolidation; (8) the effects of emerging claims and coverage issues; (9) the loss of business provided to Alterra by its major brokers; (10) the effect on Alterra’s investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors; (11) tax and regulatory changes and conditions; (12) retention of key personnel; and (13) the integration of new business ventures Alterra may enter into; as well as management’s response to any of the aforementioned factors.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the Risk Factors included in Alterra’s most recent reports on Form 10-K and Form 10-Q and other documents on file with the U.S. Securities and Exchange Commission. Any forward-looking statements made in this financial supplement are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Alterra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Alterra or its business or operations. Alterra undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

ALTERRA CAPITAL HOLDINGS LIMITED

FINANCIAL SUPPLEMENT TABLE OF CONTENTS


	Page
Financial Highlights		4
Consolidated Balance Sheets		5
Consolidated Statements of Operations —Quarterly		6
Consolidated Statements of Operations —Year to date		7
Segment Data and Ratios—Quarterly		8
Gross Premiums Written by Line of Business—Quarterly		16
Segment Data and Ratios—Year to date		18
Gross Premiums Written by Line of Business—Year to date		25
Investment Portfolio		26
Shareholder Return Analysis		30
Earnings Per Share Information		31
Operating Income Reconciliation		32
Book Value per Share		33
Regulation G		34
Reclassified Historical Segment Information		35
Pro forma Consolidated Statements of Income		39

ALTERRA CAPITAL HOLDINGS LIMITED

FINANCIAL HIGHLIGHTS

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


	For The Quarters Ended						For The Years Ended
	Dec. 31, 2011			Dec. 31, 2010			Dec. 31, 2011			Dec. 31, 2010			Previous Year Quarter Change			Previous Year to Date Change
HIGHLIGHTS
Net income	$	30,948		$	79,670		$	65,282		$	302,335			(61.2	%)		(78.4	%)
Net operating income [a]		31,685			76,216			96,600			251,712			(58.4	%)		(61.6	%)
Operating cashflow		(39,908	)		139,284			235,567			308,297			n/m			(23.6	%)
Gross premiums written		325,983			315,398			1,904,066			1,410,731			3.4	%		35.0	%
Net premiums earned		349,104			342,554			1,424,974			1,172,486			1.9	%		21.5	%
Total assets		10,185,847			9,917,288			10,185,847			9,917,288			2.7	%		2.7	%
Total shareholders’ equity		2,809,235			2,918,270			2,809,235			2,918,270			(3.7	%)		(3.7	%)
PER SHARE
Basic earnings per share
Net income	$	0.30		$	0.70		$	0.62		$	3.19
Net operating income [a]		0.31			0.67			0.92			2.66
Diluted earnings per share
Net income	$	0.30		$	0.69		$	0.61		$	3.17
Net operating income [a]		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
Book value per common share [b]	$	27.51		$	26.30		$	27.51		$	26.30			4.6	%		4.6	%
Diluted book value per share (treasury stock method) [b]		26.91			25.99			26.91			25.99			3.5	%		3.5	%
Diluted tangible book value per share (treasury stock method) [b]		26.37			25.46			26.37			25.46			3.6	%		3.6	%
RATIOS
Annualized return on average shareholders’ equity [c]		4.4	%		10.7	%		2.3	%		12.3	%
Annualized net operating return on average shareholders’ equity [c]		4.5	%		10.2	%		3.4	%		10.2	%
Loss ratio [d]		66.5	%		52.5	%		66.5	%		56.1	%
Acquisition cost ratio [d]		18.5	%		15.7	%		18.3	%		16.0	%
General and administrative expense ratio [d]		12.4	%		16.5	%		13.4	%		13.6	%
Combined ratio [d]		97.4	%		84.8	%		98.2	%		85.7	%

[a]	Net operating income represents net income excluding, as applicable, after-tax net realized and unrealized gains and losses on non-hedge fund investments, after-tax net foreign exchange gains or losses, and after-tax merger and acquisition expenses.

[b]	For detailed calculations see page 33.

[c]	For detailed calculations see page 30.

[d]	For property and casualty business only.

n/m	Not meaningful.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

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


	Dec. 31, 2011			Sept. 30, 2011			June 30 , 2011			Mar. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
ASSETS
Cash and cash equivalents	$	922,844		$	869,975		$	987,057		$	1,001,051		$	905,606		$	702,278
Fixed maturities, trading at fair value		229,206			227,753			218,481			214,807			244,872			228,696
Fixed maturities, available for sale at fair value		5,501,925			5,662,869			5,403,312			5,290,684			5,392,643			3,007,356
Fixed maturities, held to maturity at amortized cost		874,259			926,916			993,691			983,207			940,104			1,005,947
Other investments, at fair value		286,515			311,633			350,193			357,655			378,128			318,073
Accrued interest income		71,322			71,038			70,777			69,497			75,414			57,215
Premiums receivable		715,154			777,980			870,287			809,483			588,537			567,301
Losses and benefits recoverable from reinsurers		1,068,119			1,079,035			1,058,724			1,053,223			956,115			1,001,373
Deferred acquisition costs		145,850			166,353			171,517			149,197			111,901			65,648
Prepaid reinsurance premiums		212,238			214,132			215,392			176,918			149,252			190,613
Trades pending settlement		22,887			34,158			9,168			—			32,393			76,031
Goodwill and intangible assets		56,111			56,652			58,094			58,585			59,076			48,686
Other assets		79,417			73,836			90,671			86,072			83,247			70,529

Total assets	$	10,185,847		$	10,472,330		$	10,497,364		$	10,250,379		$	9,917,288		$	7,339,746


LIABILITIES
Property and casualty losses	$	4,216,538		$	4,205,057		$	4,230,290		$	4,185,230		$	3,906,134		$	3,178,094
Life and annuity benefits		1,190,697			1,230,344			1,317,527			1,316,287			1,275,580			1,372,513
Deposit liabilities		151,035			147,493			147,428			147,424			147,612			152,629
Funds withheld from reinsurers		112,469			124,631			122,705			122,072			121,107			140,079
Unearned property and casualty premiums		1,020,639			1,149,108			1,203,024			1,065,160			905,487			628,161
Reinsurance balances payable		134,354			178,560			137,910			127,299			102,942			146,085
Accounts payable and accrued expenses		110,380			110,527			104,917			103,376			99,680			67,088
Trades pending settlement		—			41,383			—			19,855			—			—
Senior notes		440,500			440,489			440,482			440,482			440,476			90,464


Total liabilities		7,376,612			7,627,592			7,704,283			7,527,185			6,999,018			5,775,113

SHAREHOLDERS' EQUITY
Common shares (par value $1.00)
102,101,950 shares issued and outstanding		102,102			104,324			105,795			105,734			110,963			55,867
Additional paid-in capital		1,847,034			1,890,763			1,911,979			1,905,144			2,026,045			752,309
Accumulated other comprehensive income		166,957			173,025			132,218			89,233			98,946			25,431
Retained earnings		693,142			676,626			643,089			623,083			682,316			731,026

Total shareholders' equity		2,809,235			2,844,738			2,793,081			2,723,194			2,918,270			1,564,633

Total liabilities and shareholders' equity	$	10,185,847		$	10,472,330		$	10,497,364		$	10,250,379		$	9,917,288		$	7,339,746

Book value per share	$	27.51		$	27.27		$	26.40		$	25.76		$	26.30		$	28.01

Diluted book value per share (treasury stock method)	$	26.91		$	27.18		$	25.98		$	25.34		$	25.99		$	27.36

Diluted tangible book value per share (treasury stock method) [a]	$	26.37		$	26.64		$	25.44		$	24.79		$	25.46		$	26.51

Debt-to-capital ratio [b]		13.6	%		13.4	%		13.6	%		13.9	%		13.1	%		5.5	%

[a]	Non-GAAP financial measure. For detailed calculations see page 33.

[b]	Calculated as debt, being senior notes, divided by shareholders’ equity plus debt.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME—QUARTERLY (Unaudited)

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


	FOR THE QUARTERS ENDED
	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
REVENUES
Gross premiums written	$	325,983		$	386,328		$	563,907		$	627,848		$	315,398		$	278,333
Reinsurance premiums ceded		(107,203	)		(90,891	)		(136,626	)		(137,357	)		(77,617	)		(103,143	)

Net premiums written	$	218,780		$	295,437		$	427,281		$	490,491		$	237,781		$	175,190

Earned premiums	$	460,636		$	452,931		$	443,008		$	489,262		$	445,683		$	325,078
Earned premiums ceded		(111,532	)		(105,889	)		(94,067	)		(109,375	)		(103,129	)		(117,805	)

Net premiums earned		349,104			347,042			348,941			379,887			342,554			207,273
Net investment income		57,080			60,335			59,665			57,766			61,080			44,668
Net realized and unrealized (losses) gains on investments		(5,775	)		(7,972	)		(5,774	)		(18,818	)		9,825			17,325
Total other-than-temporary impairment losses		(703	)		(692	)		(187	)		(1,124	)		(3,918	)		(125	)
Portion of loss recognized in other comprehensive income (loss) before taxes		1			(169	)		(166	)		95			2,144			(800	)

Net impairment losses recognized in earnings		(702	)		(861	)		(353	)		(1,029	)		(1,774	)		(925	)
Other income (loss)		2,017			1,473			591			1,315			2,862			(85	)

Total revenues		401,724			400,017			403,070			419,121			414,547			268,256

LOSSES AND EXPENSES
Net losses and loss expenses		231,533			198,521			211,133			304,406			179,047			114,870
Claims and policy benefits		14,564			14,538			15,570			14,710			18,551			16,976
Acquisition costs		64,380			61,434			64,680			70,608			53,563			23,188
Interest expense		13,296			11,303			10,630			8,459			7,866			6,685
Net foreign exchange (gains) losses		(753	)		(147	)		3,090			(878	)		(382	)		702
Merger and acquisition expenses		—			—			—			—			500			(224	)
General and administrative expenses		54,657			61,555			69,659			71,203			76,759			38,458

Total losses and expenses		377,677			347,204			374,762			468,508			335,904			200,655

INCOME (LOSS) BEFORE TAXES		24,047			52,813			28,308			(49,387	)		78,643			67,601
Income tax (benefit) expense		(6,901	)		4,427			(4,327	)		(2,700	)		(1,027	)		5,009

NET INCOME (LOSS)		30,948			48,386			32,635			(46,687	)		79,670			62,592
Change in net unrealized gains and losses on fixed maturities, net of tax		(3,670	)		61,540			42,820			(14,586	)		(87,633	)		(16,085	)
Foreign currency translation adjustment		(2,398	)		(20,733	)		165			4,873			(3,746	)		(86	)

COMPREHENSIVE INCOME (LOSS)	$	24,880		$	89,193		$	75,620		$	(56,400	)	$	(11,709	)	$	46,421

KEY RATIOS/PER SHARE DATA
Loss ratio [a]		66.5	%		57.3	%		60.7	%		80.2	%		52.5	%		55.9	%
Acquisition cost ratio [b]		18.5	%		17.7	%		18.5	%		18.6	%		15.7	%		11.1	%
General and administrative expense ratio [c]		12.4	%		12.7	%		14.5	%		13.8	%		16.5	%		14.2	%

Combined ratio [d]		97.4	%		87.7	%		93.7	%		112.5	%		84.8	%		81.2	%

Net income (loss) per share	$	0.30		$	0.46		$	0.31		$	(0.44	)	$	0.70		$	1.10
Net income (loss) per diluted share	$	0.30		$	0.46		$	0.30		$	(0.44	)	$	0.69		$	1.08
Net operating income (loss) per share—diluted [e]	$	0.30		$	0.47		$	0.37		$	(0.23	)	$	0.66		$	1.04
Annualized ROAE [f]		4.4	%		6.9	%		4.7	%		(6.6	%)		10.7	%		16.1	%
Annualized net operating ROAE [f]		4.5	%		7.1	%		5.7	%		(3.5	%)		10.2	%		15.5	%

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned for the property & casualty business.

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business.

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business.

[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 for the property & casualty business.

[e]	Non-GAAP financial measure. See page 32 for calculation of net operating income per share—diluted.

[f]	Non-GAAP financial measure. See page 30 for calculation of annualized return on average shareholders' equity (ROAE) and annualized net operating ROAE.

Results for Harbor Point Limited ("Harbor Point") are included from May 12, 2010.

Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - YEAR TO DATE AND PRIOR YEARS (Unaudited)

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


	YEAR ENDED
	Dec. 31, 2011			Dec. 31, 2010 [g]			Dec. 31, 2009
REVENUES
Gross premiums written	$	1,904,066		$	1,410,731		$	1,375,001
Reinsurance premiums ceded		(472,077	)		(371,163	)		(480,481	)

Net premiums written	$	1,431,989		$	1,039,568		$	894,520

Earned premiums	$	1,845,837		$	1,578,647		$	1,318,949
Earned premiums ceded		(420,863	)		(406,161	)		(484,593	)

Net premiums earned		1,424,974			1,172,486			834,356
Net investment income		234,846			222,458			169,741
Net realized and unrealized (losses) gains on investments		(38,339	)		16,872			81,765
Total other-than-temporary impairment losses		(2,706	)		(5,873	)		(5,315	)
Portion of loss recognized in other comprehensive income (loss) before taxes		(239	)		3,228			2,237

Net impairment losses recognized in earnings		(2,945	)		(2,645	)		(3,078	)
Other income (loss)		5,396			4,808			3,014

Total revenues		1,623,932			1,413,979			1,085,798

LOSSES AND EXPENSES
Net losses and loss expenses		945,593			654,841			493,599
Claims and policy benefits		59,382			65,213			101,093
Acquisition costs		261,102			187,464			96,874
Interest expense		43,688			28,275			21,339
Net foreign exchange losses (gains)		1,312			(115	)		(5,772	)
Merger and acquisition expenses		—			(48,776	)		(31,566	)
General and administrative expenses		257,074			220,586			153,995

Total losses and expenses		1,568,151			1,107,488			829,562

INCOME BEFORE TAXES		55,781			306,491			256,236
Income tax (benefit) expense		(9,501	)		4,156			10,021

NET INCOME		65,282			302,335			246,215
Change in net unrealized gains and losses on fixed maturities, net of tax		86,104			81,406			50,544
Foreign currency translation adjustment		(18,093	)		(7,891	)		20,286

COMPREHENSIVE INCOME	$	133,293		$	375,850		$	317,045

KEY RATIOS/PER SHARE DATA
Loss ratio [a]		66.5	%		56.1	%		62.4	%
Acquisition cost ratio [b]		18.3	%		16.0	%		12.1	%
General and administrative expense ratio [c]		13.4	%		13.6	%		13.6	%

Combined ratio [d]		98.2	%		85.7	%		88.1	%

Net income per share - basic	$	0.62		$	3.19		$	4.32
Net income per share - diluted	$	0.61		$	3.17		$	4.26
Net operating income per share - diluted [e]	$	0.91		$	2.64		$	3.62
Annualized ROAE [f]		2.3	%		12.3	%		17.6	%
Annualized Net Operating ROAE [f]		3.4	%		10.2	%		14.9	%

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned for the property & casualty business.

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business.

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business.

[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 for the property & casualty business.

[e]	Non-GAAP financial measure. See page 32 for calculation of net operating income per share—diluted.

[f]	Non-GAAP financial measure. See page 30 for calculation of annualized return on average shareholders’ equity (ROAE) and annualized net operating ROAE.

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

Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–THREE MONTHS ENDED DECEMBER 31, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)


	Property & Casualty															Life & Annuity			Corporate			Consolidated
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd's			Total			Reinsurance
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 administrative 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	%

[a]	The loss ratio is calculated by dividing net losses and loss expenses by net premiums earned for the property & casualty business.

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business.

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business.

[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 for the property & casualty business.

Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED UNDERWRITING RATIOS—THREE MONTHS ENDED DECEMBER 31, 2011 (Unaudited)


	Property & Casualty
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total
UNDERWRITING RATIOS
Loss ratio		34.3	%		51.3	%		83.0	%		151.9	%		66.5	%
Acquisition cost ratio		2.2	%		22.4	%		16.4	%		22.7	%		18.5	%
General and administrative expense ratio		18.9	%		7.8	%		18.0	%		18.6	%		12.4	%

Combined ratio		55.3	%		81.6	%		117.4	%		193.1	%		97.4	%

EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)
Loss ratio [a]		47.0	%		11.2	%		(19.9	%)		12.0	%		12.3	%

NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS
Loss ratio		81.3	%		62.5	%		63.1	%		163.9	%		78.9	%
Acquisition cost ratio		2.2	%		22.4	%		16.4	%		22.7	%		18.5	%
General and administrative expense ratio		18.9	%		7.8	%		18.0	%		18.6	%		12.4	%

Combined ratio		102.3	%		92.8	%		97.6	%		205.2	%		109.7	%

[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 DECEMBER 31, 2010 (Unaudited)


	Property & Casualty
	Insurance [b]			Reinsurance			U.S. Specialty [b]			Alterra at Lloyd’s			Total
UNDERWRITING RATIOS
Loss ratio		57.3	%		50.3	%		65.7	%		38.7	%		52.5	%
Acquisition cost ratio		2.8	%		19.8	%		17.8	%		13.6	%		15.7	%
General and administrative expense ratio		19.0	%		12.7	%		15.6	%		34.1	%		16.5	%

Combined ratio		79.0	%		82.8	%		99.0	%		86.4	%		84.8	%

EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)
Loss ratio [a]		19.9	%		5.0	%		0.2	%		16.2	%		8.2	%

NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS
Loss ratio		77.2	%		55.3	%		65.9	%		55.0	%		60.8	%
Acquisition cost ratio		2.8	%		19.8	%		17.8	%		13.6	%		15.7	%
General and administrative expense ratio		19.0	%		12.7	%		15.6	%		34.1	%		16.5	%

Combined ratio		98.9	%		87.8	%		99.2	%		102.6	%		93.0	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

[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.

ALTERRA CAPITAL HOLDINGS LIMITED

INSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010 [a]			Dec. 31, 2009 [a]
Gross premiums written	$	111,758		$	85,996		$	141,255		$	71,272		$	113,236		$	126,678
Reinsurance premiums ceded		(57,703	)		(43,195	)		(56,002	)		(43,246	)		(56,728	)		(71,053	)

Net premiums written	$	54,055		$	42,801		$	85,253		$	28,026		$	56,508		$	55,625

Earned premiums	$	100,908		$	101,355		$	97,296		$	98,944		$	106,169		$	114,155
Earned premiums ceded		(47,084	)		(51,578	)		(44,338	)		(44,730	)		(43,847	)		(56,043	)

Net premiums earned		53,824			49,777			52,958			54,214			62,322			58,112
Net losses and loss expenses		(18,446	)		(23,649	)		(28,992	)		(34,664	)		(35,687	)		(27,829	)
Acquisition costs		(1,161	)		609			361			(184	)		(1,765	)		(60	)
General and administrative expenses		(10,178	)		(8,861	)		(8,859	)		(9,825	)		(11,812	)		(7,046	)
Other income (loss)		(44	)		58			139			812			68			42

Underwriting income	$	23,995		$	17,934		$	15,607		$	10,353		$	13,126		$	23,219

Loss ratio		34.3	%		47.5	%		54.7	%		63.9	%		57.3	%		47.9	%
Acquisition cost ratio		2.2	%		(1.2	%)		(0.7	%)		0.3	%		2.8	%		0.1	%
General and administrative expense ratio		18.9	%		17.8	%		16.7	%		18.1	%		19.0	%		12.1	%

Combined ratio		55.3	%		64.1	%		70.8	%		82.4	%		79.0	%		60.1	%

[a]	Insurance and U.S. Specialty segment amounts for comparative periods have been reclassified to conform with the current period's presentation. See page 35 for additional information.

ALTERRA CAPITAL HOLDINGS LIMITED

REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
Gross premiums written	$	89,151		$	156,784		$	248,754		$	375,020		$	110,620		$	66,732
Reinsurance premiums ceded		(1,718	)		(15,874	)		(28,247	)		(37,317	)		(2,908	)		569

Net premiums written	$	87,433		$	140,910		$	220,507		$	337,703		$	107,712		$	67,301

Earned premiums	$	217,141		$	217,763		$	209,212		$	249,901		$	215,261		$	111,440
Earned premiums ceded		(19,038	)		(18,489	)		(12,305	)		(20,195	)		(21,082	)		(13,867	)

Net premiums earned		198,103			199,274			196,907			229,706			194,179			97,573
Net losses and loss expenses		(101,721	)		(113,757	)		(125,592	)		(186,885	)		(97,639	)		(61,718	)
Acquisition costs		(44,450	)		(44,298	)		(44,366	)		(49,143	)		(38,406	)		(17,578	)
General and administrative expenses		(15,462	)		(17,673	)		(22,937	)		(23,258	)		(24,714	)		(8,174	)
Other income (loss)		(100	)		777			548			—			(216	)		—

Underwriting income (loss)	$	36,370		$	24,323		$	4,560		$	(29,580	)	$	33,204		$	10,103

Loss ratio		51.3	%		57.1	%		63.8	%		81.4	%		50.3	%		63.3	%
Acquisition cost ratio		22.4	%		22.2	%		22.5	%		21.4	%		19.8	%		18.0	%
General and administrative expense ratio		7.8	%		8.9	%		11.6	%		10.1	%		12.7	%		8.4	%

Combined ratio		81.6	%		88.2	%		98.0	%		112.9	%		82.8	%		89.6	%

ALTERRA CAPITAL HOLDINGS LIMITED

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

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	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.

ALTERRA CAPITAL HOLDINGS LIMITED

U.S. SPECIALTY SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010 [a]			Dec. 31, 2009 [a]
Gross premiums written	$	88,181		$	72,159		$	99,448		$	70,388		$	65,625		$	64,572
Reinsurance premiums ceded		(37,912	)		(25,009	)		(27,358	)		(33,595	)		(15,956	)		(31,471	)

Net premiums written	$	50,269		$	47,150		$	72,090		$	36,793		$	49,669		$	33,101

Earned premiums	$	80,217		$	75,391		$	73,840		$	73,177		$	74,683		$	66,287
Earned premiums ceded		(29,821	)		(24,882	)		(22,783	)		(23,850	)		(26,140	)		(40,260	)

Net premiums earned		50,396			50,509			51,057			49,327			48,543			26,027
Net losses and loss expenses		(41,835	)		(33,641	)		(32,709	)		(31,375	)		(31,878	)		(14,809	)
Acquisition costs		(8,272	)		(9,530	)		(9,644	)		(8,066	)		(8,618	)		(1,838	)
General and administrative expenses		(9,073	)		(8,066	)		(9,289	)		(9,397	)		(7,552	)		(9,786	)

Underwriting (loss) income	$	(8,784	)	$	(728	)	$	(585	)	$	489		$	495		$	(406	)

Loss ratio		83.0	%		66.6	%		64.1	%		63.6	%		65.7	%		56.9	%
Acquisition cost ratio		16.4	%		18.9	%		18.9	%		16.4	%		17.8	%		7.1	%
General and administrative expense ratio		18.0	%		16.0	%		18.2	%		19.1	%		15.6	%		37.6	%

Combined ratio		117.4	%		101.4	%		101.1	%		99.0	%		99.0	%		101.6	%

[a]	Insurance and U.S. Specialty segment amounts for comparative periods have been reclassified to conform with the current period's presentation. See page 35 for additional information.

ALTERRA CAPITAL HOLDINGS LIMITED

ALTERRA AT LLOYD'S SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
Gross premiums written	$	35,724		$	70,567		$	73,520		$	110,733		$	23,980		$	18,344
Reinsurance premiums ceded		(9,716	)		(6,723	)		(24,918	)		(23,179	)		(1,859	)		(921	)

Net premiums written	$	26,008		$	63,844		$	48,602		$	87,554		$	22,121		$	17,423

Earned premiums	$	61,201		$	57,600		$	61,730		$	66,805		$	47,633		$	31,189
Earned premiums ceded		(15,435	)		(10,850	)		(14,540	)		(20,580	)		(11,894	)		(7,368	)

Net premiums earned		45,766			46,750			47,190			46,225			35,739			23,821
Net losses and loss expenses		(69,531	)		(27,474	)		(23,840	)		(51,482	)		(13,843	)		(10,514	)
Acquisition costs		(10,366	)		(8,070	)		(10,909	)		(13,056	)		(4,853	)		(3,339	)
General and administrative expenses		(8,499	)		(9,235	)		(9,536	)		(9,723	)		(12,186	)		(4,116	)
Other income (loss)		851			(27	)		165			215			2,006			183

Underwriting (loss) income	$	(41,779	)	$	1,944		$	3,070		$	(27,821	)	$	6,863		$	6,035

Loss ratio		151.9	%		58.8	%		50.5	%		111.4	%		38.7	%		44.1	%
Acquisition cost ratio		22.7	%		17.3	%		23.1	%		28.2	%		13.6	%		14.0	%
General and administrative expense ratio		18.6	%		19.8	%		20.2	%		21.0	%		34.1	%		17.3	%

Combined ratio		193.1	%		95.8	%		93.8	%		160.7	%		86.4	%		75.4	%

ALTERRA CAPITAL HOLDINGS LIMITED

LIFE AND ANNUITY REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
Gross premiums written	$	1,169		$	822		$	930		$	435		$	1,937		$	2,007
Reinsurance premiums ceded		(154	)		(90	)		(101	)		(20	)		(166	)		(267	)

Net premiums written	$	1,015		$	732		$	829		$	415		$	1,771		$	1,740

Earned premiums	$	1,169		$	822		$	930		$	435		$	1,937		$	2,007
Earned premiums ceded		(154	)		(90	)		(101	)		(20	)		(166	)		(267	)

Net premiums earned		1,015			732			829			415			1,771			1,740
Net investment income		11,515			12,131			12,545			12,343			12,084			13,367
Net realized and unrealized (losses) gains on investments		(5,509	)		(6,407	)		(1,299	)		2,807			3,981			8,192
Other income (loss)		413			(8	)		(23	)		—			357			(120	)
Claims and policy benefits		(14,564	)		(14,538	)		(15,570	)		(14,710	)		(18,551	)		(16,976	)
Acquisition costs		(131	)		(145	)		(122	)		(159	)		79			(373	)
General and administrative expenses		(67	)		(145	)		(259	)		(177	)		(1,088	)		(606	)

(Loss) income before taxes	$	(7,328	)	$	(8,380	)	$	(3,899	)	$	519		$	(1,367	)	$	5,224

ALTERRA CAPITAL HOLDINGS LIMITED

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS (Unaudited)

(Expressed in thousands of United States Dollars)


		FOR THE QUARTERS ENDED
		Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Dec. 31, 2010 [a]			Dec. 31, 2009 [a]
Property & Casualty:
Insurance:
Aviation	S	$	20,410		$	6,736		$	3,814		$	1,416		$	22,677		$	39,520
Excess Liability	L		23,664			24,165			41,390			27,387			27,361			28,321
Professional Liability	L		52,075			39,489			66,017			26,796			51,199			45,059
Property	S		15,609			15,606			30,034			15,673			11,999			13,778

			111,758			85,996			141,255			71,272			113,236			126,678
Reinsurance [b]:
Agriculture	S		186			998			8,713			20,785			(1,406	)		2,212
Auto	S		20,548			8,994			55,105			15,160			22,585			—
Aviation	S		337			14,670			80			904			2,596			9,380
Credit/ Surety	S		1,818			7,116			1,556			24,426			1,118			—
General Casualty	L		12,952			22,570			22,045			16,247			17,658			5,781
Marine & Energy	S		3,407			4,131			(619	)		17,093			(1,549	)		3,599
Medical Malpractice	L		1,673			6,867			11,223			17,582			19,554			11,086
Other	S		(181	)		1,112			447			1,759			520			29
Professional Liability	L		20,321			40,075			39,462			59,684			28,538			25,609
Property	S		18,927			44,715			106,168			149,874			6,296			(2,375	)
Whole Account	S/L		2,408			(1,946	)		268			35,070			426			2,947
Workers’ Compensation	L		6,755			7,482			4,306			16,436			14,284			8,464

			89,151			156,784			248,754			375,020			110,620			66,732
U.S. Specialty:
General Liability	L		29,235			21,125			18,387			17,883			19,914			17,118
Marine	S		23,806			22,189			25,389			17,109			17,758			15,443
Professional Liability	L		4,005			4,419			4,894			4,355			(534	)		576
Property	S		31,135			24,426			50,778			31,041			28,487			31,435

			88,181			72,159			99,448			70,388			65,625			64,572

Alterra at Lloyd’s:
Accident & Health	S		5,646			9,523			8,380			13,544			5,570			1,245
Aviation	S		5,562			4,130			1,810			1,767			5,224			2,611
Financial Institutions	L		8,137			3,591			6,441			9,036			384			5,446
International Casualty	L		2,074			8,005			8,486			33,860			2,213			—
Marine	S		1,493			—			—			—			—			—
Professional Liability	L		1,868			440			10,466			7,922			4,204			5,290
Property	S		5,998			43,510			37,937			44,623			5,946			3,752
Surety	S		4,946			1,368			—			(19	)		439			—

			35,724			70,567			73,520			110,733			23,980			18,344
Aggregate Property & Casualty		$	324,814		$	385,506		$	562,977		$	627,413		$	313,461		$	276,326

Life & Annuity:
Annuity		$	770		$	449		$	271		$	336		$	1,129		$	—
Life			399			373			659			99			808			2,007

Aggregate Life & Annuity		$	1,169		$	822		$	930		$	435		$	1,937		$	2,007

Aggregate Property & Casualty and Life & Annuity		$	325,983		$	386,328		$	563,907		$	627,848		$	315,398		$	278,333

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

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


S = Short tail lines	$	160,851	$	208,251	$	329,726	$	372,690	$	128,473	$	122,103
L = Long tail lines		163,963		177,255		233,251		254,723		184,988		154,224

Aggregate Property & Casualty	$	324,814	$	385,506	$	562,977	$	627,413	$	313,461	$	276,326

ALTERRA CAPITAL HOLDINGS LIMITED

PRO FORMA ALTERRA REINSURANCE SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS [a] (Unaudited)

(Expressed in thousands of United States Dollars)

Gross Premiums Written by Type of Risk:


		FOR THE QUARTERS ENDED
		Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			Mar. 31, 2010		Dec. 31, 2009		Sept. 30, 2009			June 30, 2009			Mar. 31, 2009
Agriculture	S	$	(1,406	)	$	(2,665	)	$	(4,643	)	$	55,944	$	2,153	$	(96	)	$	(262	)	$	91,196
Auto	S		22,585			10,251			14,359			18,063		19,531		12,828			11,288			15,148
Aviation	S		2,596			15,313			8,586			6,191		9,395		18,154			10,760			4,509
Credit/ Surety	S		1,118			2,569			1,530			23,555		9,058		369			2,440			8,828
General Casualty	L		17,658			18,505			6,724			42,398		15,607		31,167			10,225			36,892
Marine & Energy	S		(1,549	)		8,826			5,220			21,128		4,033		8,565			(3,731	)		37,799
Medical Malpractice	L		19,554			(3,131	)		6,424			33,804		11,093		7,077			21,783			36,417
Other	S		520			1,183			294			5,664		168		(57	)		485			3,011
Professional Liability	L		28,538			37,965			51,615			55,812		37,407		60,373			53,705			50,629
Property	S		6,296			34,859			96,745			138,958		2,260		34,240			118,581			142,118
Whole Account	S/L		426			(232	)		3,095			47,135		6,578		4,569			18,503			5,369
Workers’ Compensation	L		14,284			561			7,197			11,966		8,164		33,693			19,161			29,225

Aggregate Pro Forma Reinsurance Segment		$	110,620		$	124,004		$	197,146		$	460,618	$	125,447	$	210,882		$	262,938		$	461,141

[a]

This information is based on historical Alterra reinsurance segment gross premiums written adjusted to include Harbor Point historical gross premiums written as though the amalgamation with Harbor Point had occurred on January 1, 2009. The financial information also includes adjustments to eliminate any intercompany transactions.

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 with Harbor Point had occurred on January 1, 2009, nor is it necessarily indicative of future results.

ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL UNDERWRITING DATA–YEAR ENDED DECEMBER 31, 2011 (Unaudited)

(Expressed in thousands of United States Dollars)


	Property & Casualty															Life & Annuity			Corporate			Consolidated
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total			Reinsurance
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 administrative 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 for the property & casualty business.

[b]	The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned for the property & casualty business.

[c]	The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned for the property & casualty business.

[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 for the property & casualty business.

Percentage totals may not add due to rounding.

ALTERRA CAPITAL HOLDINGS LIMITED

CONSOLIDATED UNDERWRITING RATIOS - YEAR ENDED DECEMBER 31, 2011 (Unaudited)


	Property & Casualty
	Insurance			Reinsurance			U.S. Specialty			Alterra at Lloyd’s			Total
UNDERWRITING RATIOS
Loss ratio		50.2	%		64.1	%		69.3	%		92.7	%		66.5	%
Acquisition cost ratio		0.2	%		22.1	%		17.6	%		22.8	%		18.3	%
General and administrative expense ratio		17.9	%		9.6	%		17.8	%		19.9	%		13.4	%

Combined ratio		68.2	%		95.8	%		104.8	%		135.4	%		98.2	%

EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)
Loss ratio [a]		31.7	%		9.8	%		(5.7	%)		9.3	%		10.8	%

NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS
Loss ratio		81.9	%		73.9	%		63.6	%		102.0	%		77.3	%
Acquisition cost ratio		0.2	%		22.1	%		17.6	%		22.8	%		18.3	%
General and administrative expense ratio		17.9	%		9.6	%		17.8	%		19.9	%		13.4	%

Combined ratio		100.0	%		105.6	%		99.1	%		144.7	%		109.0	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

CONSOLIDATED UNDERWRITING RATIOS - YEAR ENDED DECEMBER 31, 2010 (Unaudited)


	Property & Casualty
	Insurance [b]			Reinsurance [c]			U.S. Specialty [b]			Alterra at Lloyd’s			Total
UNDERWRITING RATIOS
Loss ratio		59.7	%		55.4	%		62.7	%		44.3	%		56.1	%
Acquisition cost ratio		1.6	%		20.9	%		16.5	%		17.9	%		16.0	%
General and administrative expense ratio		14.7	%		10.5	%		17.7	%		21.1	%		13.6	%

Combined ratio		76.0	%		86.8	%		96.9	%		83.4	%		85.7	%

EFFECT OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT FAVORABLE / (UNFAVORABLE)
Loss ratio [a]		19.3	%		7.1	%		0.5	%		11.0	%		9.0	%

NET OF PRIOR ACCIDENT YEAR RESERVE DEVELOPMENT UNDERWRITING RATIOS
Loss ratio		79.0	%		62.5	%		63.2	%		55.3	%		65.1	%
Acquisition cost ratio		1.6	%		20.9	%		16.5	%		17.9	%		16.0	%
General and administrative expense ratio		14.7	%		10.5	%		17.7	%		21.1	%		13.6	%

Combined ratio		95.2	%		93.9	%		97.4	%		94.4	%		94.8	%

[a]	Prior accident year reserve development excludes changes in reserves resulting from changes in premium estimates on prior years’ contracts.

[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.

ALTERRA CAPITAL HOLDINGS LIMITED

INSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010 [a]			Dec. 31, 2009 [a]
Gross premiums written	$	410,281		$	399,612		$	447,340
Reinsurance premiums ceded		(200,146	)		(180,691	)		(218,633	)

Net premiums written	$	210,135		$	218,921		$	228,707

Earned premiums	$	398,503		$	415,396		$	434,147
Earned premiums ceded		(187,730	)		(180,684	)		(216,687	)

Net premiums earned		210,773			234,712			217,460
Net losses and loss expenses		(105,751	)		(140,108	)		(140,403	)
Acquisition costs		(375	)		(3,651	)		1,206
General and administrative expenses		(37,723	)		(34,508	)		(27,927	)
Other income		965			1,267			1,620

Underwriting income	$	67,889		$	57,712		$	51,956

Loss ratio		50.2	%		59.7	%		64.6	%
Acquisition cost ratio		0.2	%		1.6	%		(0.6	%)
General and administrative expense ratio		17.9	%		14.7	%		12.8	%

Combined ratio		68.2	%		76.0	%		76.9	%

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

See page 35 for additional information.

ALTERRA CAPITAL HOLDINGS LIMITED

REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010 [a]			Dec. 31, 2009
Gross premiums written	$	869,709		$	509,053		$	489,028
Reinsurance premiums ceded		(83,156	)		(64,131	)		(80,005	)

Net premiums written	$	786,553		$	444,922		$	409,023

Earned premiums	$	894,017		$	699,243		$	476,434
Earned premiums ceded		(70,027	)		(71,627	)		(88,578	)

Net premiums earned		823,990			627,616			387,856
Net losses and loss expenses		(527,955	)		(347,816	)		(254,474	)
Acquisition costs		(182,257	)		(131,114	)		(71,074	)
General and administrative expenses		(79,330	)		(66,073	)		(31,778	)
Other income		1,225			—			12

Underwriting income	$	35,673		$	82,613		$	30,542

Loss ratio		64.1	%		55.4	%		65.6	%
Acquisition cost ratio		22.1	%		20.9	%		18.3	%
General and administrative expense ratio		9.6	%		10.5	%		8.2	%

Combined ratio		95.8	%		86.8	%		92.1	%

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

ALTERRA CAPITAL HOLDINGS LIMITED

U.S. SPECIALTY SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010 [a]			Dec. 31, 2009 [a]
Gross premiums written	$	330,176		$	294,498		$	265,905
Reinsurance premiums ceded		(123,874	)		(88,493	)		(148,546	)

Net premiums written	$	206,302		$	206,005		$	117,359

Earned premiums	$	302,625		$	288,270		$	239,613
Earned premiums ceded		(101,336	)		(117,657	)		(149,008	)

Net premiums earned		201,289			170,613			90,605
Net losses and loss expenses		(139,560	)		(107,052	)		(54,764	)
Acquisition costs		(35,512	)		(28,174	)		(7,474	)
General and administrative expenses		(35,825	)		(30,122	)		(27,925	)
Other income (loss)		—			—			(68	)

Underwriting (loss) income	$	(9,608	)	$	5,265		$	374

Loss ratio		69.3	%		62.7	%		60.4	%
Acquisition cost ratio		17.6	%		16.5	%		8.2	%
General and administrative expense ratio		17.8	%		17.7	%		30.8	%

Combined ratio		104.8	%		96.9	%		99.5	%

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

See page 35 for additional information.

ALTERRA CAPITAL HOLDINGS LIMITED

ALTERRA AT LLOYD’S SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
Gross premiums written	$	290,544		$	202,633		$	128,973
Reinsurance premiums ceded		(64,536	)		(37,448	)		(32,884	)

Net premiums written	$	226,008		$	165,185		$	96,089

Earned premiums	$	247,336		$	170,803		$	125,000
Earned premiums ceded		(61,405	)		(35,793	)		(29,907	)

Net premiums earned		185,931			135,010			95,093
Net losses and loss expenses		(172,327	)		(59,865	)		(43,958	)
Acquisition costs		(42,401	)		(24,164	)		(18,136	)
General and administrative expenses		(36,993	)		(28,531	)		(19,972	)
Other income		1,204			2,534			658

Underwriting (loss) income	$	(64,586	)	$	24,984		$	13,685

Loss ratio		92.7	%		44.3	%		46.2	%
Acquisition cost ratio		22.8	%		17.9	%		19.1	%
General and administrative expense ratio		19.9	%		21.1	%		21.0	%

Combined ratio		135.4	%		83.4	%		86.3	%

ALTERRA CAPITAL HOLDINGS LIMITED

LIFE AND ANNUITY REINSURANCE SEGMENT DATA (Unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010			Dec. 31, 2009
Gross premiums written	$	3,356		$	4,935		$	43,755
Reinsurance premiums ceded		(365	)		(400	)		(413	)

Net premiums written	$	2,991		$	4,535		$	43,342

Earned premiums	$	3,356		$	4,935		$	43,755
Earned premiums ceded		(365	)		(400	)		(413	)

Net premiums earned		2,991			4,535			43,342
Net investment income		48,534			49,785			50,993
Net realized and unrealized (losses) gains on investments		(10,408	)		11,358			37,338
Other income (loss)		382			286			(120	)
Claims and policy benefits		(59,382	)		(65,213	)		(101,093	)
Acquisition costs		(557	)		(361	)		(1,396	)
General and administrative expenses		(648	)		(2,964	)		(2,786	)

(Loss) income before taxes	$	(19,088	)	$	(2,574	)	$	26,278

ALTERRA CAPITAL HOLDINGS LIMITED

SEGMENT GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS (Unaudited)

(Expressed in thousands of United States Dollars)


		FOR THE YEARS ENDED
		Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Property & Casualty:
Insurance [a]:
Aviation	S	$	32,376	$	39,888	$	69,834
Excess Liability	L		116,606		113,573		133,340
Professional Liability	L		184,377		183,051		179,904
Property	S		76,922		63,100		64,262

			410,281		399,612		447,340
Reinsurance [b]:
Agriculture	S		30,682		29,222		89,550
Auto	S		99,807		32,902		—
Aviation	S		15,991		31,292		34,715
Credit/ Surety	S		34,916		2,196		—
General Casualty	L		73,814		48,357		29,185
Marine & Energy	S		24,012		16,381		18,321
Medical Malpractice	L		37,345		51,391		67,483
Other	S		3,137		2,784		2,297
Professional Liability	L		159,542		110,427		71,531
Property	S		319,684		148,146		87,039
Whole Account	S/L		35,800		5,129		11,456
Workers’ Compensation	L		34,979		30,826		77,451

			869,709		509,053		489,028
U.S. Specialty [a]:
General Liability	L		86,630		81,137		68,209
Marine	S		88,493		67,454		61,360
Professional Liability	L		17,673		6,602		576
Property	S		137,380		139,305		135,760

			330,176		294,498		265,905
Alterra at Lloyd’s:
Accident & Health	S		37,093		30,921		22,602
Aviation	S		13,269		16,138		2,611
Financial Institutions	L		27,205		19,448		23,822
International Casualty	L		52,425		26,174		—
Marine	S		1,493		—		—
Professional Liability	L		20,696		19,591		19,889
Property	S		132,068		85,553		60,049
Surety	S		6,295		4,808		—

			290,544		202,633		128,973

Aggregate Property & Casualty		$	1,900,710	$	1,405,796	$	1,331,246

Life & Annuity:
Annuity		$	1,826	$	1,135	$	—
Life			1,530		3,800		43,755

Aggregate Life & Annuity		$	3,356	$	4,935	$	43,755

Aggregate Property & Casualty and Life & Annuity		$	1,904,066	$	1,410,731	$	1,375,001

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

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


S = Short tail lines	$	1,071,518	$	712,655	$	654,128
L = Long tail lines		829,192		693,141		677,118

Aggregate Property & Casualty	$	1,900,710	$	1,405,796	$	1,331,246

ALTERRA CAPITAL HOLDINGS LIMITED

INVESTMENT PORTFOLIO (Unaudited)

(Expressed in thousands of United States Dollars)


Type of Investment	Carrying Value										Fair Value
	As of Dec. 31, 2011		Investment Distribution			As of Dec. 31, 2010		Investment Distribution			As of Dec. 31, 2011		Investment Distribution			As of Dec. 31, 2010		Investment Distribution
Cash and cash equivalents	$	922,844		11.8	%	$	905,606		11.5	%	$	922,844		11.6	%	$	905,606		11.4	%

U.S. government and agencies		751,806		9.6	%		995,546		12.7	%		751,806		9.5	%		995,546		12.5	%
Non-U.S. governments		164,621		2.1	%		79,111		1.0	%		164,621		2.1	%		79,111		1.0	%
Corporate securities		2,646,358		33.9	%		2,735,366		34.8	%		2,646,358		33.3	%		2,735,366		34.5	%
Municipal securities		263,007		3.4	%		238,014		3.0	%		263,007		3.3	%		238,014		3.0	%
Asset-backed securities		247,965		3.2	%		86,937		1.1	%		247,965		3.1	%		86,937		1.1	%
Residential mortgage-backed securities		1,296,277		16.6	%		1,168,390		14.9	%		1,296,277		16.3	%		1,168,390		14.7	%
Commercial mortgage-backed securities		361,097		4.6	%		334,151		4.3	%		361,097		4.5	%		334,151		4.2	%

Fixed maturities carried at fair value	$	5,731,131		73.3	%	$	5,637,515		71.7	%	$	5,731,131		72.1	%	$	5,637,515		71.0	%

Other investments carried at fair value	$	286,515		3.7	%	$	378,128		4.8	%	$	286,515		3.6	%	$	378,128		4.8	%

Total investments carried at fair value	$	6,940,490		88.8	%	$	6,921,249		88.0	%	$	6,940,490		87.3	%	$	6,921,249		87.2	%

U.S. government and agencies	$	29,201		0.4	%	$	29,687		0.4	%	$	32,906		0.4	%	$	30,200		0.4	%
Non-U.S. governments		524,449		6.7	%		538,274		6.8	%		623,080		7.8	%		587,053		7.4	%
Corporate securities		319,609		4.1	%		371,143		4.7	%		354,504		4.5	%		397,261		5.0	%
Asset-backed securities		1,000		0.0	%		1,000		0.0	%		1,003		0.0	%		998		0.0	%

Fixed maturities carried at amortized cost	$	874,259		11.2	%	$	940,104		12.0	%	$	1,011,493		12.7	%	$	1,015,512		12.8	%

Total invested assets	$	7,814,749		100.0	%	$	7,861,353		100.0	%	$	7,951,983		100.0	%	$	7,936,761		100.0	%

As of December 31, 2011, the weighted average book yield of the cash and fixed maturities portfolio was 3.46%, and the weighted average duration was 4.1 years.


Credit Ratings	As of Dec. 31, 2011		Ratings Distribution			As of Dec. 31, 2010		Ratings Distribution			As of Dec. 31, 2011		Ratings Distribution			As of Dec. 31, 2010		Ratings Distribution
U.S. government and agencies [a]	$	1,869,405		28.3	%	$	2,060,116		31.3	%	$	1,869,405		27.7	%	$	2,060,116		31.0	%
AAA		948,861		14.4	%		1,076,680		16.4	%		948,861		14.1	%		1,076,680		16.2	%
AA		883,783		13.4	%		657,867		10.0	%		883,783		13.1	%		657,867		9.9	%
A		1,378,361		20.9	%		1,353,945		20.6	%		1,378,361		20.4	%		1,353,945		20.4	%
BBB		281,983		4.3	%		226,849		3.4	%		281,983		4.2	%		226,849		3.4	%
BB		84,803		1.3	%		32,021		0.5	%		84,803		1.3	%		32,021		0.5	%
B		131,159		2.0	%		138,703		2.1	%		131,159		1.9	%		138,703		2.1	%
CCC or lower		53,157		0.8	%		45,469		0.7	%		53,157		0.8	%		45,469		0.7	%
Not rated		99,619		1.5	%		45,865		0.7	%		99,619		1.5	%		45,865		0.7	%

Fixed maturities carried at fair value	$	5,731,131		86.8	%	$	5,637,515		85.7	%	$	5,731,131		85.0	%	$	5,637,515		84.7	%

U.S. government and agencies	$	29,201		0.4	%	$	29,687		0.5	%	$	32,907		0.5	%	$	30,200		0.5	%
AAA		619,832		9.4	%		641,437		9.8	%		733,631		10.9	%		699,598		10.5	%
AA		82,511		1.2	%		113,140		1.7	%		88,631		1.3	%		118,276		1.8	%
A		117,600		1.8	%		141,683		2.2	%		129,791		1.9	%		151,127		2.3	%
BBB		24,117		0.4	%		12,744		0.2	%		25,705		0.4	%		14,764		0.2	%
BB		998		0.0	%		—		0.0	%		828		0.0	%		—		0.0	%
Not rated		—		—			1,413		0.0	%		—		—			1,547		0.0	%

Fixed maturities carried at amortized cost	$	874,259		13.2	%	$	940,104		14.3	%	$	1,011,493		15.0	%	$	1,015,512		15.3	%

Total fixed maturities	$	6,605,390		100.0	%	$	6,577,619		100.0	%	$	6,742,624		100.0	%	$	6,653,027		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.


	Quarter Ended Dec. 31, 2011			Quarter Ended Sept. 30, 2011			Quarter Ended June 30, 2011			Quarter Ended Mar. 31, 2011			Quarter Ended Dec. 31. 2010			Quarter Ended Dec. 31, 2009
Net investment income	$	57,080		$	60,335		$	59,665		$	57,766		$	61,080		$	44,668

Realized and unrealized gains (losses) on trading fixed maturities	$	763		$	1,663		$	1,432		$	(1,827	)	$	(3,893	)	$	3
Net realized gains (losses) on available for sale fixed maturities		1,990			6,096			54			3,369			5,816			3,234
(Decrease) increase in fair value of hedge funds		(5,415	)		(7,669	)		(1,878	)		3,167			5,465			13,555
(Decrease) increase in fair value of non-hedge fund other investments		(3,113	)		(8,062	)		(5,382	)		(23,527	)		2,437			533

Net realized and unrealized (losses) gains on investments	$	(5,775	)	$	(7,972	)	$	(5,774	)	$	(18,818	)	$	9,825		$	17,325

Net impairment losses recognized in earnings	$	(702	)	$	(861	)	$	(353	)	$	(1,029	)	$	(1,774	)	$	(925	)

ALTERRA CAPITAL HOLDINGS LIMITED

INVESTMENT PORTFOLIO (Unaudited)

(Expressed in thousands of United States Dollars)


				Periodic Rate of Return
	As of Dec. 31, 2011			Last 3 Months			Year to Date			Last 12 months			Last 60 months*
Cash and fixed maturities	$	7,528,234			0.93	%		5.75	%		5.75	%		5.32	%

Distressed securities	$	24,987			(1.47	%)		(2.45	%)		(2.45	%)		3.37	%
Diversified arbitrage		17,368			(1.01	%)		(4.48	%)		(4.48	%)		(2.54	%)
Emerging markets		4,929			(0.36	%)		0.29	%		0.29	%		3.44	%
Event-driven arbitrage		21,130			(17.22	%)		(23.71	%)		(23.71	%)		(2.69	%)
Fixed income arbitrage		—			0.00	%		0.00	%		0.00	%		12.65	%
Fund of funds		31,691			0.36	%		0.56	%		0.56	%		0.98	%
Global macro		48,965			(1.64	%)		0.99	%		0.99	%		5.23	%
Long / short credit		4,414			(6.29	%)		(12.05	%)		(12.05	%)		0.31	%
Long / short equity		94,793			1.01	%		(0.28	%)		(0.28	%)		4.71	%
Opportunistic		1,694			0.00	%		(36.79	%)		(36.79	%)		(21.73	%)

Hedge funds **		249,971			(1.79	%)		(3.57	%)		(3.57	%)		1.22	%
Derivatives		(1,666	)
Structured deposits		24,540
Equity investments		13,670

Total other investments	$	286,515

Total invested assets	$	7,814,749

Hedge Fund Investment Return Data:


HFRI Fund of Funds Composite Index [a]					(0.39	%)				(5.64%)			(5.64	%)			(0.73	%)

Hedge Fund Performance History – 60 months ended December 31, 2011


	2011			2010			2009			2008			2007
Monthly performance
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		0.15	%		0.36	%		1.40	%		(4.12	%)		0.99	%
August		(1.37	%)		(0.28	%)		0.78	%		(2.14	%)		(1.62	%)
September		(1.13	%)		1.28	%		1.71	%		(7.31	%)		1.85	%
October		0.07	%		0.84	%		1.53	%		(4.85	%)		4.15	%
November		(0.19	%)		0.40	%		0.35	%		(1.75	%)		0.10	%
December		(1.67	%)		0.31	%		0.77	%		(1.92	%)		(0.13	%)
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		(2.33	%)		1.35	%		3.94	%		(13.03	%)		1.18	%
Q4		(1.79	%)		1.56	%		2.66	%		(8.31	%)		4.11	%
Period return		(3.57	%)		4.25	%		12.27	%		(19.38	%)		16.78	%

Past performance should not be considered to be a reliable indicator of future performance.

[a]	As reported by HFRI as of February 1, 2012

*	Annualized

**	Net of all fees

ALTERRA CAPITAL HOLDINGS LIMITED

LARGEST 25 CORPORATE HOLDINGS [a] (Unaudited)

(Expressed in thousands of United States Dollars)


	As of Dec. 31, 2011
	Amortized Cost		Fair Value
Issuer
General Electric Co.	$	56,865	$	58,706
JP Morgan Chase & Co		52,832		54,537
Bank of America Corp		56,973		52,970
Morgan Stanley		44,288		42,724
Wells Fargo & Co		41,604		42,653
Citigroup Inc		44,118		42,350
BP plc		35,395		36,706
Pepsico Inc		33,648		35,601
Credit Suisse Group AG		35,754		35,463
Novartis AG		33,004		34,927
AT&T Inc		31,586		33,659
Lloyds Banking Group plc		31,644		31,317
Goldman Sachs Group Inc		31,653		30,637
UBS AG		28,958		30,269
Verizon Communications Inc		27,918		29,908
Conoco Philips		25,428		27,989
Wal-Mart Stores Inc		24,705		27,525
Metlife Inc		25,257		26,990
BNP Paribas SA		27,393		26,608
International Business Machines Corp		21,840		23,880
Medtronic Inc.		22,443		23,708
HSBC Holdings plc		23,469		23,514
Coca-Cola Co		20,484		22,549
Barclays plc		23,471		22,437
Duke Energy Corp.		20,832		22,392

	$	821,561	$	840,019

[a]	Listing excludes supranationals and government-guaranteed holdings.

ALTERRA CAPITAL HOLDINGS LIMITED

EUROPEAN GOVERNMENT AND EUROPEAN FINANCIAL INSTITUTION HOLDINGS (Unaudited)

(Expressed in thousands of United States Dollars)


	As of Dec. 31, 2011
	Fair Value		% of Total
Largest European Government Holdings
France	$	263,787		36.3	%
Germany		247,483		34.0	%
Netherlands		147,829		20.3	%
Ireland		23,803		3.3	%
Belgium		19,765		2.7	%
United Kingdom		11,429		1.6	%
Denmark		5,831		0.8	%
All Other European Governments		7,197		1.0	%

Total European government holdings	$	727,124		100.0	%


	As of Dec. 31, 2011
	Fair Value		% of Total
Largest European Financial Institution Holdings
European Investment Bank	$	66,515		14.1	%
KFW		49,175		10.4	%
Credit Suisse Group AG		35,463		7.5	%
Lloyds Banking Group plc		31,317		6.7	%
UBS AG		30,269		6.4	%
BNP Paribas SA		26,608		5.7	%
HSBC Holdings plc		23,514		5.0	%
Barclays plc		22,437		4.8	%
All Other		185,664		39.4	%

Total European financial institutions	$	470,962		100.0	%

ALTERRA CAPITAL HOLDINGS LIMITED

SHAREHOLDER RETURN ANALYSIS (Unaudited)

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


	FOR THE QUARTERS ENDED						FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010			Dec. 31, 2011			Dec. 31, 2010
Income and Return on Equity:
Net income	$	30,948		$	79,670		$	65,282		$	302,335
Net operating income	$	31,685		$	76,216		$	96,600		$	251,712
Average shareholders’ equity	$	2,826,987		$	2,977,404		$	2,806,191		$	2,467,429

Annualized return on average shareholders' equity [a]		4.4	%		10.7	%		2.3	%		12.3	%
Annualized net operating return on average shareholders' equity [a]		4.5	%		10.2	%		3.4	%		10.2	%

Book value and dividends per share:
Diluted book value per share	$	26.91		$	25.99		$	26.91		$	25.99
Dividends paid per share	$	0.14		$	0.12		$	0.52		$	2.94
Change in diluted book value per share		(1.0	%)		0.4	%		3.5	%		(5.0	%)

Dividend payout ratio [b]		0.5	%		0.5	%		1.9	%		22.4	%
Total return to shareholders [c]		(0.5	%)		0.9	%		5.4	%		17.4	%

[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. The average shareholders’ equity for the year ended December 31, 2010 has been weighted to include Harbor Point from May 12, 2010.

[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.

ALTERRA CAPITAL HOLDINGS LIMITED

EARNINGS PER SHARE INFORMATION (Unaudited)

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


	FOR THE QUARTERS ENDED				FOR THE YEARS ENDED
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2011		Dec. 31, 2010
Net income available to common shareholders	$	30,948	$	79,670	$	65,282	$	302,335

Denominator:
Weighted average shares - basic
Outstanding [a]		103,081,593		113,807,820		105,022,397		94,426,055
Unvested restricted share units		241,784		160,467		227,286		256,224

		103,323,377		113,968,287		105,249,683		94,682,279
Share equivalents:
Warrants		1,247,101		600,014		1,023,278		537,399
Options		101,285		150,375		124,022		183,258
Employee stock purchase plan		1,128		4,514		1,386		2,301
Non participating restricted shares		—		108,277		104,524		54,138


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


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

[a]	Includes weighted average unvested participating 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 average market price during the period of calculation.

ALTERRA CAPITAL HOLDINGS LIMITED

OPERATING INCOME RECONCILIATION (Unaudited)

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


	FOR THE QUARTERS ENDED						FOR THE YEARS ENDED
	Dec. 31, 2011			Dec. 31, 2010			Dec. 31, 2011		Dec. 31, 2010
Before tax
Net income	$	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	$	24,353		$	76,134		$	86,579	$	257,665

Net of tax
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

Weighted average shares outstanding:
Basic		103,323,377			113,968,287			105,249,683		94,682,279
Diluted		104,672,891			114,831,467			106,502,893		95,459,375
Basic per share data
Earnings per share	$	0.30		$	0.70		$	0.62	$	3.19
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 share	$	0.31		$	0.67		$	0.92	$	2.66

Diluted per share data
Diluted earnings per 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	)		—			0.02		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

[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.

ALTERRA CAPITAL HOLDINGS LIMITED

BOOK VALUE PER SHARE (Unaudited)

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


	As of Dec. 31, 2011		As of Dec. 31, 2010
Price per share at period end	$	23.63	$	21.64
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

Basic common shares outstanding [a]		102,101,950		110,963,160
Add: unvested restricted stock units		241,108		167,971
Add: dilutive impact of warrants outstanding		1,938,297		1,036,442
Add: dilutive impact of options outstanding		125,424		123,395

Diluted shares outstanding [b]		104,406,779		112,290,968

Basic book value per share	$	27.51	$	26.30
Diluted book value per share	$	26.91	$	25.99
Basic tangible book value per share	$	26.96	$	25.77
Diluted tangible book value per share	$	26.37	$	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.

ALTERRA CAPITAL HOLDINGS LIMITED

REGULATION G

In presenting the Company’s results, management has included and discussed net operating income, net operating income per share, net operating income per diluted share, annualized net operating return on average shareholders’ equity, tangible book value per share 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 the Company’s business. These measures, however, should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The reconciliation of such measures to their respective most directly comparable U.S. GAAP financial measures is presented in the attached financial information in accordance with Regulation G.

Net operating income is defined as net income excluding after-tax net realized and unrealized gains or losses on non- hedge fund investments (this includes net realized and unrealized gains or losses on trading securities, net realized gains or losses on available for sale securities, net impairment losses recognized in earnings, changes in fair value of derivatives, catastrophe bonds, structured deposits and earnings from equity method investments), after-tax net foreign exchange gains or losses and after-tax merger and acquisition expenses. Net operating income per share and per diluted share is defined as the net operating income divided by the weighted average common shares or weighted average diluted common shares, respectively. We believe that this non-GAAP measure provides a better indication of management performance and the underlying fundamentals of our operations as realized and unrealized gains and losses on non-hedge fund investments and foreign exchange gains and losses may fluctuate from period to period and are typically outside the control of management. Merger and acquisition expenses are not indicative of expenses fundamental to the business and may fluctuate from period to period.

Annualized net operating return on average shareholders’ equity is defined as annualized net operating income divided by the average of the beginning and ending shareholders’ equity. Tangible book value is defined as shareholders’ equity excluding goodwill and intangible assets. Tangible book value per share and diluted tangible book value per share is defined as the tangible book value divided by the common shares outstanding or diluted common shares outstanding, respectively. These non-GAAP measures allow management to assess how the Company has performed in terms of wealth generated for its shareholders.

ALTERRA CAPITAL HOLDINGS LIMITED

Reclassified Segment Information

Selected Financial Information

ALTERRA CAPITAL HOLDINGS LIMITED

RECLASSIFICATION OF INSURANCE AND U.S. SPECIALTY SEGMENTS

(Expressed in thousands of United States Dollars)

INSURANCE SEGMENT


	Year ended						Year ended			Year ended						Year ended
	Dec. 31, 2010			Reclassified			Dec. 31, 2010			Dec. 31, 2009			Reclassified			Dec. 31, 2009
	(Reclassified)			amounts			(As previously			(Reclassified)			amounts			(As previously
							reported)									reported)
Gross premiums written	$	399,612		$	29,492		$	370,120		$	447,340		$	19,573		$	427,767
Reinsurance premiums ceded		(180,691	)		(10,083	)		(170,608	)		(218,633	)		(6,550	)		(212,083	)

Net premiums written	$	218,921		$	19,409		$	199,512		$	228,707		$	13,023		$	215,684

Earned premiums	$	415,396		$	23,680		$	391,716		$	434,147		$	17,057		$	417,090
Earned premiums ceded		(180,684	)		(7,561	)		(173,123	)		(216,687	)		(5,560	)		(211,127	)

Net premiums earned		234,712			16,119			218,593			217,460			11,497			205,963
Net losses and loss expenses		(140,108	)		(11,285	)		(128,823	)		(140,403	)		(8,048	)		(132,355	)
Acquisition costs		(3,651	)		(270	)		(3,381	)		1,206			(27	)		1,233
General and administrative expenses		(34,508	)		(5,893	)		(28,615	)		(27,927	)		(3,304	)		(24,623	)
Other income		1,267			507			760			1,620			382			1,238

Underwriting income (loss)	$	57,712		$	(822	)	$	58,534		$	51,956		$	500		$	51,456

Loss ratio		59.7	%					58.9	%		64.6	%					64.3	%
Acquisition cost ratio		1.6	%					1.6	%		(0.6	%)					(0.6	%)
General and administrative expense ratio		14.7	%					13.1	%		12.8	%					11.9	%

Combined ratio		76.0	%					73.6	%		76.9	%					75.6	%

U.S. SPECIALTY SEGMENT


	Year ended						Year ended			Year ended						Year ended
	Dec. 31, 2010			Reclassified			Dec. 31, 2010			Dec. 31, 2009			Reclassified			Dec. 31, 2009
	(Reclassified)			amounts			(As previously			(Reclassified)			amounts			(As previously
							reported)									reported)
Gross premiums written	$	294,498		$	(29,492	)	$	323,990		$	265,905		$	(19,573	)	$	285,478
Reinsurance premiums ceded		(88,493	)		10,083			(98,576	)		(148,546	)		6,550			(155,096	)

Net premiums written	$	206,005		$	(19,409	)	$	225,414		$	117,359		$	(13,023	)	$	130,382

Earned premiums	$	288,270		$	(23,680	)	$	311,950		$	239,613		$	(17,057	)	$	256,670
Earned premiums ceded		(117,657	)		7,561			(125,218	)		(149,008	)		5,560			(154,568	)

Net premiums earned		170,613			(16,119	)		186,732			90,605			(11,497	)		102,102
Net losses and loss expenses		(107,052	)		11,285			(118,337	)		(54,764	)		8,048			(62,812	)
Acquisition costs		(28,174	)		270			(28,444	)		(7,474	)		27			(7,501	)
General and administrative expenses		(30,122	)		5,893			(36,015	)		(27,925	)		3,304			(31,229	)
Other income		—			(507	)		507			(68	)		(382	)		314

Underwriting income (loss)	$	5,265		$	822		$	4,443		$	374		$	(500	)	$	874

Loss ratio		62.7	%					63.4	%		60.4	%					61.5	%
Acquisition cost ratio		16.5	%					15.2	%		8.2	%					7.3	%
General and administrative expense ratio		17.7	%					19.3	%		30.8	%					30.7	%

Combined ratio		96.9	%					97.9	%		99.5	%					99.5	%

Effective January 1, 2011, Alterra redefined its Insurance and U.S. Specialty segments based on changes to its internal reporting structure.

Insurance business underwritten by Alterra Insurance USA Inc., which was previously reported within the U.S. Specialty segment, has been reclassified to the Insurance segment. Alterra Insurance USA Inc. is a managing general underwriter for Alterra Excess & Surplus Insurance Company and Alterra America Insurance Company, as well as various third party insurance companies, and is Alterra's principal insurance underwriting platform for retail distribution in the United States. Segment disclosures for comparative periods have been restated to reflect this reclassification.

ALTERRA CAPITAL HOLDINGS LIMITED

INSURANCE SEGMENT Results - as Reclassified (Unaudited)

(Expressed in thousands of United States Dollars)


	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	$	113,236		$	77,944		$	139,026		$	69,406		$	126,678		$	90,430		$	139,226		$	91,006
Reinsurance premiums ceded		(56,728	)		(36,875	)		(47,437	)		(39,651	)		(71,053	)		(43,388	)		(47,972	)		(56,220	)

Net premiums written	$	56,508		$	41,069		$	91,589		$	29,755		$	55,625		$	47,042		$	91,254		$	34,786

Earned premiums	$	106,169		$	102,640		$	104,841		$	101,746		$	114,155		$	108,776		$	105,576		$	105,640
Earned premiums ceded		(43,847	)		(42,796	)		(45,211	)		(48,830	)		(56,043	)		(56,337	)		(51,129	)		(53,178	)

Net premiums earned		62,322			59,844			59,630			52,916			58,112			52,439			54,447			52,462
Net losses and loss expenses		(35,687	)		(26,679	)		(38,296	)		(39,446	)		(27,829	)		(34,515	)		(39,901	)		(38,158	)
Acquisition costs		(1,765	)		(1,382	)		(821	)		317			(60	)		(331	)		230			1,367
General and administrative expenses		(11,812	)		(7,717	)		(8,132	)		(6,847	)		(7,046	)		(8,114	)		(6,693	)		(6,074	)
Other income		68			1,108			97			(6	)		42			143			219			1,216

Underwriting income	$	13,126		$	25,174		$	12,478		$	6,934		$	23,219		$	9,622		$	8,302		$	10,813

Loss ratio		57.3	%		44.6	%		64.2	%		74.5	%		47.9	%		65.8	%		73.3	%		72.7	%
Acquisition cost ratio		2.8	%		2.3	%		1.4	%		(0.6	%)		0.1	%		0.6	%		(0.4	%)		(2.6	%)
General and administrative expense ratio		19.0	%		12.9	%		13.6	%		12.9	%		12.1	%		15.5	%		12.3	%		11.6	%

Combined ratio		79.0	%		59.8	%		79.2	%		86.9	%		60.1	%		81.9	%		85.2	%		81.7	%

ALTERRA CAPITAL HOLDINGS LIMITED

U.S. SPECIALTY SEGMENT Results - as Reclassified (Unaudited)

(Expressed in thousands of United States Dollars)


	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	$	65,625		$	64,198		$	90,773		$	73,902		$	64,572		$	60,123		$	75,701		$	65,509
Reinsurance premiums ceded		(15,956	)		(18,713	)		(5,672	)		(48,152	)		(31,471	)		(24,755	)		(52,938	)		(39,382	)

Net premiums written	$	49,669		$	45,485		$	85,101		$	25,750		$	33,101		$	35,368		$	22,763		$	26,127

Earned premiums	$	74,683		$	73,337		$	71,065		$	69,185		$	66,287		$	63,360		$	59,053		$	50,913
Earned premiums ceded		(26,140	)		(26,071	)		(27,053	)		(38,393	)		(40,260	)		(35,551	)		(41,271	)		(31,926	)

Net premiums earned		48,543			47,266			44,012			30,792			26,027			27,809			17,782			18,987
Net losses and loss expenses		(31,878	)		(29,295	)		(26,683	)		(19,196	)		(14,809	)		(18,507	)		(11,057	)		(10,391	)
Acquisition costs		(8,618	)		(6,763	)		(9,111	)		(3,682	)		(1,838	)		(1,964	)		(2,483	)		(1,189	)
General and administrative expenses		(7,552	)		(8,693	)		(6,355	)		(7,522	)		(9,786	)		(6,971	)		(4,357	)		(6,811	)
Other income		—			—			—			—			—			—			153			(221	)

Underwriting income (loss)	$	495		$	2,515		$	1,863		$	392		$	(406	)	$	367		$	38		$	375

Loss ratio		65.7	%		62.0	%		60.6	%		62.3	%		56.9	%		66.6	%		62.2	%		54.7	%
Acquisition cost ratio		17.8	%		14.3	%		20.7	%		12.0	%		7.1	%		7.1	%		14.0	%		6.3	%
General and administrative expense ratio		15.6	%		18.4	%		14.4	%		24.4	%		37.6	%		25.1	%		24.5	%		35.9	%

Combined ratio		99.0	%		94.7	%		95.8	%		98.7	%		101.6	%		98.7	%		100.6	%		96.9	%

ALTERRA CAPITAL HOLDINGS LIMITED

Pro Forma Combined - Alterra Capital Holdings Limited and Harbor Point Limited Selected Financial Information

The following presentation is for informational purposes only

ALTERRA CAPITAL HOLDINGS LIMITED

PRO FORMA COMBINED STATEMENTS OF INCOME [a] (unaudited)

(Expressed in thousands of United States Dollars)


	FOR THE QUARTERS ENDED
	June 30, 2010			Mar. 31, 2010			Dec. 31, 2009			Sept. 30, 2009			June 30, 2009			Mar. 31, 2009
REVENUES
Gross premiums written	$	476,550		$	676,905		$	337,048		$	382,650		$	564,251		$	662,432
Reinsurance premiums ceded		(81,333	)		(159,515	)		(81,627	)		(73,703	)		(126,503	)		(168,155	)

Net premiums written	$	395,217		$	517,390		$	255,421		$	308,947		$	437,748		$	494,277

Net premiums earned	$	368,061		$	338,332		$	347,833		$	351,245		$	366,130		$	317,598
Net investment income		61,562			64,583			60,668			60,068			59,636			58,943
Net realized and unrealized (losses) gains on investments		(13,734	)		13,280			18,004			29,622			22,462			20,722
Net impairment losses recognized in earnings		(300	)		(420	)		(925	)		(139	)		(2,014	)		—
Net realized gain on retirement of senior notes		—			—			111			—			—			—
Other income		339			480			189			964			1,193			1,799

Total revenues		415,928			416,255			425,880			441,760			447,407			399,062

LOSSES AND EXPENSES
Net losses and loss expenses		213,517			210,543			166,573			181,064			186,301			178,130
Claims and policy benefits		13,943			17,659			16,976			14,378			55,407			14,332
Acquisition costs		64,315			53,998			54,042			59,613			53,317			47,611
Interest expense		8,061			5,226			6,978			6,292			5,146			4,351
Net foreign exchange (gains) losses		(1,622	)		(869	)		789			(116	)		(5,571	)		(1,911	)
Merger and acquisition expenses		—			—			—			(41,350	)		4,785			5,223
General and administrative expenses		60,137			51,611			66,157			57,048			53,979			57,508

Total losses and expenses		358,351			338,168			311,515			276,929			353,364			305,244

INCOME BEFORE TAXES		57,577			78,087			114,365			164,831			94,043			93,818
Income tax expense		4,294			1,311			5,686			2,910			3,206			1,990

NET INCOME	$	53,283		$	76,776		$	108,679		$	161,921		$	90,837		$	91,828

[a]

This information is presented on a combined pro forma basis (after the elimination of intercompany transactions and the amortization of certain acquisition accounting fair value adjustments). The information is provided for informational purposes only to present a summary of the combined results of operations assuming the amalgamation with Harbor Point had occurred at the beginning of each calendar year presented. The information does not necessarily represent results that would have occurred if the amalgamation had taken place at the beginning of each calendar year presented, nor is it necessarily indicative of the future results.

ALTERRA CAPITAL HOLDINGS Ltd - FORM 8-K - EX-99.2 - INVESTOR FINANCIAL SUPPLEMENT - February 8, 2012

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