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Alterra Capital Reports Fourth Quarter And Year End 2012 Results

* * * * *

Risks and uncertainties relating to the proposed transaction include the risks that: (1) the parties will not obtain the requisite shareholder or regulatory approvals for the transaction; (2) the anticipated benefits of the transaction will not be realized or the parties may experience difficulties in successfully integrating the two companies; (3) the parties may not be able to retain key personnel; (4) the conditions to the closing of the proposed merger may not be satisfied or waived; (5) the outcome of any legal proceedings to the extent initiated against Alterra or Markel or its respective directors and officers following the announcement of the proposed merger is uncertain; (6) the acquisition may involve unexpected costs; and (7) the businesses may suffer as a result of uncertainty surrounding the acquisition. These risks, as well as other risks of the combined company and its subsidiaries may be different from what the companies expect, or have previously experienced, and each party's management may respond differently to any of the aforementioned factors. These risks, as well as other risks associated with the merger, are more fully discussed in the joint proxy statement/prospectus of Markel and Alterra that has been filed with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made.

ADDITIONAL INFORMATION ABOUT THE PROPOSED MERGER AND WHERE TO FIND IT:

This release relates to a proposed merger between Alterra and Markel. On December 27, 2012, Markel filed with the SEC a registration statement on Form S-4, and on January 18, 2013, Markel and Alterra each filed the definitive joint proxy statement/prospectus. This release is not a substitute for the definitive joint proxy statement/prospectus or any other document that Markel or Alterra filed or may file with the SEC or send to its shareholders in connection with the proposed merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT MAY BE FILED WITH THE SEC OR SENT TO SHAREHOLDERS AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. All documents, when filed, will be available free of charge at the SEC's website ( www.sec.gov) or, in the case of Alterra, by directing a request to Joe Roberts, Chief Financial Officer, or Susan Spivak Bernstein, Senior Vice President, Investor Relations, at 441-295-8800 and, in the case of Markel, by directing a request to Bruce Kay, Investor Relations, at 804-747-0136.

PARTICIPANTS IN THE SOLICITATION:

Alterra and Markel and their respective directors and executive officers may be deemed to be participants in any solicitation of proxies from both Alterra's and Markel's shareholders in favor of the proposed transaction. Information about Alterra's directors and executive officers and their ownership in Alterra common stock is available in the proxy statement dated March 26, 2012 for Alterra's 2012 annual general meeting of shareholders. Information about Markel's directors and executive officers and their ownership of Markel common stock is available in the proxy statement dated March 16, 2012 for Markel's 2012 annual meeting of shareholders.

       
ALTERRA CAPITAL HOLDINGS LIMITED
 

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of United States Dollars, except per share and share amounts)
 
December 31, 2012 December 31, 2011
(Unaudited)
ASSETS
Cash and cash equivalents $ 440,298 $ 469,477
Fixed maturities, trading, at fair value 429,246 229,206
Fixed maturities, available for sale, at fair value 5,647,303 5,501,925
Fixed maturities, held to maturity, at amortized cost (fair value $1,070,308) 852,266 874,259
Equity method investments 92,050 13,670
Other investments, at fair value 316,955 272,845
Restricted cash and cash equivalents 254,458 453,367
Accrued interest income 65,361 71,322
Premiums receivable 729,877 715,154
Losses and benefits recoverable from reinsurers 1,289,577 1,068,119
Deferred acquisition costs 146,328 145,850
Prepaid reinsurance premiums 247,740 212,238
Trades pending settlement 27,768 22,887
Goodwill and intangible assets 54,751 56,111
Other assets 64,272 79,417
Total assets $ 10,658,250   $ 10,185,847
 
LIABILITIES
Property and casualty losses $ 4,690,344 $ 4,216,538
Life and annuity benefits 1,159,545 1,190,697
Deposit liabilities 132,910 151,035
Funds withheld from reinsurers 92,733 112,469
Unearned property and casualty premiums 1,031,633 1,020,639
Reinsurance balances payable 157,199 134,354
Accounts payable and accrued expenses 107,742 110,380
Trades pending settlement 5,890
Senior notes 440,532 440,500
Total liabilities 7,818,528   7,376,612
 
SHAREHOLDERS’ EQUITY
Common shares (par value $1.00 per share);96,059,645 (2011—102,101,950) shares issued and outstanding 96,060 102,102
Additional paid-in capital 1,721,241 1,847,034
Accumulated other comprehensive income 244,172 166,957
Retained earnings 778,249 693,142
Total shareholders’ equity 2,839,722   2,809,235
 
Total liabilities and shareholders’ equity $ 10,658,250   $ 10,185,847
 
Book value per share $ 29.56   $ 27.51
 
Diluted book value per share $ 28.34   $ 26.91
 
Diluted tangible book value per share [a] $ 27.79   $ 26.37
 
Diluted shares outstanding 100,213,325 104,406,779
 

[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,

2012

2011

2012

2011

REVENUES
Gross premiums written $ 357,043 $ 325,983 $ 1,971,458 $ 1,904,066
Reinsurance premiums ceded (113,881 ) (107,203 ) (651,699 ) (472,077 )
Net premiums written $ 243,162   $ 218,780   $ 1,319,759   $ 1,431,989  
 
Earned premiums $ 504,757 $ 460,636 $ 1,962,685 $ 1,845,837
Earned premiums ceded (161,125 ) (111,532 ) (597,462 ) (420,863 )
Net premiums earned 343,632 349,104 1,365,223 1,424,974
 
Net investment income 52,039 57,080 218,964 234,846
Net realized and unrealized gains (losses) on investments 11,476 (5,775 ) 70,886 (38,339 )
 
Total other-than-temporary impairment losses (3,143 ) (703 ) (9,552 ) (2,706 )
Portion of loss recognized in other comprehensive income (loss), before taxes 2,766   1   2,644   (239 )
Net impairment losses recognized in earnings (377 ) (702 ) (6,908 ) (2,945 )
 
Other income 1,425 2,017 10,301 5,396
       
Total revenues 408,195   401,724   1,658,466   1,623,932  
 
LOSSES AND EXPENSES
Net losses and loss expenses 295,123 231,533 926,445 945,593
Claims and policy benefits 17,006 14,564 55,582 59,382
Acquisition costs 66,595 64,380 250,413 261,102
Interest expense 8,355 13,296 35,644 43,688
Net foreign exchange (gains) losses (71 ) (753 ) (160 ) 1,312
Merger and acquisition expenses 3,289 3,289
General and administrative expenses 55,188 54,657 231,562 257,074
       
Total losses and expenses 445,485   377,677   1,502,775   1,568,151  
 
INCOME (LOSS) BEFORE TAXES (37,290 ) 24,047 155,691 55,781
 
Income tax expense (benefit) 14,520   (6,901 ) 11,885   (9,501 )
 
NET INCOME (LOSS) (51,810 ) 30,948 143,806 65,282
 
Holding (losses) gains on available for sale securities arising in period [a] (2,988 ) (566 ) 114,263 97,044
Net realized gains on available for sale securities included in net income [a] (3,157 ) (3,103 ) (25,966 ) (11,179 )
Portion of other-than-temporary impairment losses recognized in other comprehensive income [a] (2,765 ) (1 ) (2,643 ) 239
Impact of net unrealized investment gains on life & annuity deferred acquisition costs (2,842 ) (2,842 )
Foreign currency translation adjustment (9,308 ) (2,398 ) (5,597 ) (18,093 )
Other comprehensive income (loss) (21,060 ) (6,068 ) 77,215 68,011
       
COMPREHENSIVE INCOME (LOSS) $ (72,870 ) $ 24,880   $ 221,021   $ 133,293  
 
Net income (loss) per share $ (0.54 ) $ 0.30   $ 1.47   $ 0.62  
Net income (loss) per diluted share $ (0.54 ) $ 0.30   $ 1.43   $ 0.61  
Net operating (loss) income per diluted share [b] $ (0.52 ) $ 0.30   $ 1.18   $ 0.91  
 
Weighted average common shares outstanding—basic 95,691,699   103,323,377   98,012,424   105,249,683  
Weighted average common shares outstanding—diluted 95,691,699   104,672,891   100,557,352   106,502,893  
 
[a] Net of tax.
[b] Non-GAAP financial 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,

2012

 

2011

Common shares
Balance, beginning of year $ 102,102 $ 110,963
Issuance of common shares, net 842 1,529
Repurchase of shares (6,884 ) (10,390 )
Balance, end of year 96,060   102,102  
 
Additional paid-in capital
Balance, beginning of year 1,847,034 2,026,045
Issuance of common shares, net 3,577 2,480
Stock based compensation expense 22,434 33,208
Repurchase of shares (151,804 ) (214,699 )
Balance, end of year 1,721,241   1,847,034  
 
Accumulated other comprehensive income
Unrealized holdings gains on investments:
Balance, beginning of year 204,301 118,197
Holding gains on available for sale fixed maturities arising in period, net of tax 114,263 97,044
Net realized gains on available for sale securities included in net income, net of tax (25,966 ) (11,179 )
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of tax (2,643 ) 239
Impact of net unrealized investment gains on life & annuity deferred acquisition costs (2,842 )  
Balance, end of year 287,113   204,301  
 
Cumulative foreign currency translation adjustment:
Balance, beginning of year (37,344 ) (19,251 )
Foreign currency translation adjustment (5,597 ) (18,093 )
Balance, end of year (42,941 ) (37,344 )
   
Total accumulated other comprehensive income, end of year 244,172   166,957  
 
Retained earnings
Balance, beginning of year 693,142 682,316
Net income 143,806 65,282
Dividends (58,699 ) (54,456 )
Balance, end of year 778,249   693,142  
 
Total shareholders’ equity $ 2,839,722   $ 2,809,235  
 
                 
ALTERRA CAPITAL HOLDINGS LIMITED
 
CONSOLIDATED STATEMENTS OF CASHFLOWS (Unaudited)
(Expressed in thousands of United States Dollars)
 
Year Ended December 31,

2012

 

2011

OPERATING ACTIVITIES
Net income $ 143,806 $ 65,282
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation 22,434 33,208
Amortization of premium on fixed maturities 33,403 23,562
Accretion of deposit liabilities 1,816 9,298
Net realized and unrealized (gains) losses on investments (70,886 ) 38,339
Net impairment losses recognized in earnings 6,908 2,945
Changes in:
Accrued interest income 5,996 4,079
Premiums receivable (10,822 ) (128,754 )
Losses and benefits recoverable from reinsurers (219,516 ) (114,759 )
Deferred acquisition costs 3,348 (34,591 )
Prepaid reinsurance premiums (34,768 ) (63,564 )
Other assets 17,280 (1,476 )
Property and casualty losses 459,066 308,587
Life and annuity benefits (51,231 ) (59,010 )
Funds withheld from reinsurers (19,736 ) (8,680 )
Unearned property and casualty premiums 6,397 118,401
Reinsurance balances payable 22,711 31,931
Accounts payable and accrued expenses (3,093 ) 10,769
     
Cash provided by operating activities 313,113     235,567  
 
INVESTING ACTIVITIES
Purchases of available for sale securities (2,236,243 ) (2,317,677 )
Sales of available for sale securities 923,875 1,311,423
Redemptions/maturities of available for sale securities 1,250,105 965,974
Purchases of trading securities (532,454 ) (76,355 )
Sales of trading securities 305,184 24,563
Redemptions/maturities of trading securities 37,283 68,848
Purchases of held to maturity securities (2,580 )
Redemptions/maturities of held to maturity securities 32,040 45,713
Net (purchases) sales of other investments (28,175 ) 60,783
Net purchases of equity method investments (66,145 ) (6,766 )
Dividends from equity method investments 8,694
Change in restricted cash and cash equivalents 198,909 (103,458 )
   
Cash used in investing activities (106,927 ) (29,532 )
 
FINANCING ACTIVITIES
Net proceeds from issuance of common shares 4,419 4,009
Repurchase of common shares (158,688 ) (225,089 )
Dividends paid (58,322 ) (54,456 )
Additions to deposit liabilities 8,940 1,061
Payments of deposit liabilities (28,881 ) (6,733 )
   
Cash used in financing activities (232,532 ) (281,208 )
 
Effect of exchange rate changes on foreign currency cash and cash equivalents (2,833 ) (11,047 )
 
Net decrease in cash and cash equivalents (29,179 ) (86,220 )
 
Cash and cash equivalents, beginning of year 469,477 555,697
   
CASH AND CASH EQUIVALENTS, END OF YEAR $ 440,298   $ 469,477  
 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONInterest paid totaled $28,400 and $28,582 for the years ended December 31, 2012 and 2011, respectively.Income taxes paid totaled $7,954 and $2,049 for the years ended December 31, 2012 and 2011, respectively.

     

ALTERRA CAPITAL HOLDINGS LIMITED

 
SCHEDULE OF SUPPLEMENTAL SEGMENT DATA - THREE MONTHS ENDED DECEMBER 31, 2012 (Unaudited)
(Expressed in thousands of United States Dollars)
     
Property & Casualty Life & Annuity Reinsurance Corporate Consolidated
Global Insurance   U.S. Insurance   Reinsurance   Alterra at Lloyd’s   Total      
Gross premiums written $ 97,964   $ 94,587   $ 125,630   $ 38,233   $ 356,414 $ 629 $ $ 357,043
Reinsurance premiums ceded (48,698 )   (55,863 )   (10,950 )   1,704     (113,807 )   (74 )       (113,881 )
Net premiums written $ 49,266     $ 38,724     $ 114,680     $ 39,937     $ 242,607     $ 555     $     $ 243,162  
 
Earned premiums $ 94,486 $ 98,142 $ 240,252 $ 71,248 $ 504,128 $ 629 $

$ 504,757
Earned premiums ceded (47,524 )   (62,839 )   (41,447 )   (9,241 )   (161,051 )  

(74

)       (161,125 )
Net premiums earned 46,962 35,303 198,805 62,007 343,077 555 343,632
 
Net losses and loss expenses (39,503 ) (85,476 ) (130,869 ) (39,275 ) (295,123 ) (295,123 )
Claims and policy benefits

 

 

(17,006 ) (17,006 )
Acquisition costs (552 ) (4,915 ) (49,339 ) (11,880 ) (66,686 ) 91 (66,595 )
General and administrative expenses (7,871 ) (10,849 ) (19,002 ) (8,722 ) (46,444 ) (76 ) (46,520 )
Other income         1,400         1,400             1,400  
Underwriting income (loss) $ (964 ) $ (65,937 ) $ 995 $ 2,130 $ (63,776 ) n/a n/a
Net investment income 13,727 38,312 52,039
Net realized and unrealized gains on investments 11,476 11,476
Net impairment losses recognized in earnings (377 ) (377 )
Corporate other income 25 25
Interest expense (8,355 ) (8,355 )
Net foreign exchange gains 71 71
Merger and acquisition expenses (3,289 ) (3,289 )
Corporate general and administrative expenses     (8,668 )   (8,668 )
Income (loss) before taxes $ (2,709 )   $ 29,195     $ (37,290 )
Loss ratio (a) 84.1 % 242.1 % 65.8 % 63.3 % 86.0 %
Acquisition cost ratio (b) 1.2 % 13.9 % 24.8 % 19.2 % 19.4 %
General and administrative expense ratio (c) 16.8 %   30.7 %   9.6 %   14.1 %   13.5 %
Combined ratio (d) 102.1 %   286.8 %   100.2 %   96.6 %   119.0 %
 
SCHEDULE OF SUPPLEMENTAL SEGMENT DATA - YEAR ENDED DECEMBER 31, 2012 (Unaudited)
(Expressed in thousands of United States Dollars)
 
Property & Casualty Life & Annuity Reinsurance Corporate Consolidated
Global Insurance   U.S. Insurance   Reinsurance   Alterra at Lloyd’s   Total      
Gross premiums written $ 371,638 $ 399,061 $ 898,453 $ 299,458 $ 1,968,610 $ 2,848 $ $ 1,971,458
Reinsurance premiums ceded (189,330 )   (217,964 )   (171,285 )   (72,789 )   (651,368 )   (331 )       (651,699 )
Net premiums written $ 182,308     $ 181,097     $ 727,168     $ 226,669     $ 1,317,242     $ 2,517     $     $ 1,319,759  
 
Earned premiums $ 373,918 $ 394,870 $ 911,019 $ 280,030 $ 1,959,837 $ 2,848 $ $ 1,962,685
Earned premiums ceded (188,416 )   (200,007 )   (142,870 )   (65,838 )   (597,131 )   (331 )       (597,462 )
Net premiums earned 185,502 194,863 768,149 214,192 1,362,706 2,517 1,365,223
 
Net losses and loss expenses (111,940 ) (206,862 ) (444,321 ) (163,322 ) (926,445 ) (926,445 )
Claims and policy benefits (55,582 ) (55,582 )
Acquisition costs (974 ) (23,184 ) (187,078 ) (38,861 ) (250,097 ) (316 ) (250,413 )
General and administrative expenses (27,593 ) (46,658 ) (71,633 ) (33,015 ) (178,899 ) (303 ) (179,202 )
Other income 816     81     9,296     8     10,201             10,201  
Underwriting income (loss) $ 45,811 $ (81,760 ) $ 74,413 $ (20,998 ) $ 17,466 n/a n/a
Net investment income 55,193 163,771 218,964
Net realized and unrealized gains on investments 70,886 70,886
Net impairment losses recognized in earnings (6,908 ) (6,908 )
Corporate other income 100 100
Interest expense (35,644 ) (35,644 )
Net foreign exchange gains 160 160
Merger and acquisition expenses (3,289 ) (3,289 )
Corporate general and administrative expenses     (52,360 )   (52,360 )
Income before taxes $ 1,509     $ 136,716     $ 155,691  
Loss ratio (a) 60.3 % 106.2 % 57.8 % 76.3 % 68.0 %
Acquisition cost ratio (b) 0.5 % 11.9 % 24.4 % 18.1 % 18.4 %
General and administrative expense ratio (c) 14.9 %   23.9 %   9.3 %   15.4 %   13.1 %
Combined ratio (d) 75.7 %   142.0 %   91.5 %   109.8 %   99.5 %
 
(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.
n/a Not applicable
Percentage totals may not add due to rounding.
 
SCHEDULE OF SUPPLEMENTAL SEGMENT DATA - THREE MONTHS ENDED DECEMBER 31, 2011 (Unaudited)
(Expressed in thousands of United States Dollars)      
 
      Property & Casualty Life & Annuity Reinsurance Corporate Consolidated
Global Insurance   U.S. Insurance   Reinsurance   Alterra at Lloyd’s   Total      
Gross premiums written $ 97,660   $ 102,279   $ 96,942   $ 27,933   $ 324,814 $ 1,169 $ $ 325,983
Reinsurance premiums ceded (50,172 )   (45,443 )   (2,546 )   (8,888 )   (107,049 )   (154 )       (107,203 )
Net premiums written $ 47,488     $ 56,836     $ 94,396     $ 19,045     $ 217,765     $ 1,015     $     $ 218,780  
 
Earned premiums $ 91,077 $ 90,048 $ 225,492 $ 52,850 $ 459,467 $ 1,169 $ $ 460,636
Earned premiums ceded (42,827 )   (34,078 )   (19,521 )   (14,952 )   (111,378 )   (154 )       (111,532 )
Net premiums earned 48,250 55,970 205,971 37,898 348,089 1,015 349,104
 
Net losses and loss expenses (15,152 ) (45,129 ) (106,906 ) (64,346 ) (231,533 ) (231,533 )
Claims and policy benefits (14,564 ) (14,564 )
Acquisition costs (1,084 ) (8,349 ) (46,839 ) (7,977 ) (64,249 ) (131 ) (64,380 )
General and administrative expenses (6,952 ) (12,299 ) (16,690 ) (7,271 ) (43,212 ) (67 ) (43,279 )
Other income (128 )   84     (100 )   851     707     413         1,120  
Underwriting income (loss) $ 24,934 $ (9,723 ) $ 35,436 $ (40,845 ) $ 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 )
Income (loss) before taxes $ (7,328 )   $ 21,573     $ 24,047  
Loss ratio (a) 31.4 % 80.6 % 51.9 % 169.8 % 66.5 %
Acquisition cost ratio (b) 2.2 % 14.9 % 22.7 % 21.0 % 18.5 %
General and administrative expense ratio (c) 14.4 %   22.0 %   8.1 %   19.2 %   12.4 %
Combined ratio (d) 48.1 %   117.5 %   82.7 %   210.0 %   97.4 %
 
SCHEDULE OF SUPPLEMENTAL SEGMENT DATA - YEAR ENDED DECEMBER 31, 2011 (Unaudited)
(Expressed in thousands of United States Dollars)
 
Property & Casualty Life & Annuity Reinsurance Corporate Consolidated
Global Insurance   U.S. Insurance   Reinsurance   Alterra at Lloyd’s   Total      
Gross premiums written $ 365,761 $ 374,696 $ 907,186 $ 253,067 $ 1,900,710 $ 3,356 $ $ 1,904,066
Reinsurance premiums ceded (181,454 )   (142,566 )   (83,984 )   (63,708 )   (471,712 )   (365 )  

    (472,077 )
Net premiums written $ 184,307     $ 232,130     $ 823,202     $ 189,359     $ 1,428,998     $ 2,991     $     $ 1,431,989  
 
Earned premiums $ 364,087 $ 337,041 $ 916,688 $ 224,665 $ 1,842,481 $ 3,356 $ $ 1,845,837
Earned premiums ceded (175,348 )   (113,718 )   (70,510 )   (60,922 )   (420,498 )   (365 )       (420,863 )
Net premiums earned 188,739 223,323 846,178 163,743 1,421,983 2,991 1,424,974
 
Net losses and loss expenses (91,753 ) (153,558 ) (541,959 ) (158,323 ) (945,593 ) (945,593 )
Claims and policy benefits (59,382 ) (59,382 )
Acquisition costs 517 (36,404 ) (187,853 ) (36,805 ) (260,545 ) (557 ) (261,102 )
General and administrative expenses (28,377 ) (45,171 ) (85,019 ) (31,304 ) (189,871 ) (648 ) (190,519 )
Other income 686     279     1,225     1,204     3,394     382         3,776  
Underwriting income (loss) $ 69,812 $ (11,531 ) $ 32,572 $ (61,485 ) $ 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 )
Income (loss) before taxes $ (19,088 )   $ 45,501     $ 55,781  
Loss ratio (a) 48.6 % 68.8 % 64.0 % 96.7 % 66.5 %
Acquisition cost ratio (b) (0.3 )% 16.3 % 22.2 % 22.5 % 18.3 %
General and administrative expense ratio (c) 15.0 %   20.2 %   10.0 %   19.1 %   13.4 %
Combined ratio (d) 63.4 %   105.3 %   96.3 %   138.3 %   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.
n/a Not applicable
Percentage totals may not add due to rounding.
                           
ALTERRA CAPITAL HOLDINGS LIMITED

SCHEDULE OF SUPPLEMENTAL PREMIUM DATA - YEAR ENDED DECEMBER 31, 2012 (Unaudited)

 

(Expressed in thousands of United States Dollars)

 
Year Ended December 31, 2012 Year Ended December 31, 2011

Gross Premiums Written

 

Percentage of Total Gross Premiums Written

Movement on Prior Year Period

Gross Premiums Written [a]

 

Percentage of Total Gross Premiums Written [a]

Property & Casualty:
Global Insurance:
Aviation S $ 27,514 1.4 % (15.0 )% $ 32,376 1.7 %
Excess Liability L 102,754 5.2 % 4.2 % 98,582 5.2 %
Professional Liability L 166,457 8.4 % 5.4 % 157,881 8.3 %
Property S 74,913   3.8 % (2.6 )% 76,922   4.0 %
371,638 18.9 % 1.6 % 365,761 19.2 %
U.S. Insurance:
General/Excess Liability L 100,265 5.1 % (4.2 )% 104,654 5.5 %
Marine S 100,887 5.1 % 14.0 % 88,493 4.6 %
Professional Liability L 61,238 3.1 % 38.6 % 44,169 2.3 %
Property S 136,671   6.9 % (0.5 )% 137,380   7.2 %
399,061 20.2 % 6.5 % 374,696 19.7 %
Reinsurance:
Agriculture S 23,074 1.2 % (24.8 )% 30,682 1.6 %
Auto S 53,443 2.7 % (45.7 )% 98,360 5.2 %
Aviation S 28,332 1.4 % 77.2 % 15,991 0.8 %
Credit/Surety S 64,978 3.3 % 57.7 % 41,210 2.2 %
General Casualty L 83,212 4.2 % 11.5 % 74,652 3.9 %
Marine & Energy S 25,851 1.3 % 7.7 % 24,012 1.3 %
Medical Malpractice L 22,708 1.2 % (39.2 )% 37,345 2.0 %
Other S 4,081 0.2 % 32.9 % 3,071 0.2 %
Professional Liability L 164,719 8.4 % 3.4 % 159,293 8.4 %
Property S 382,566 19.4 % 8.7 % 351,791 18.5 %
Whole Account S/L 6,302 0.3 % (82.4 )% 35,800 1.9 %
Workers' Compensation L 39,187   2.0 % 12.0 % 34,979   1.8 %
898,453 45.6 % (1.0 )% 907,186 47.6 %
Alterra at Lloyd's:
Accident & Health S 43,045 2.2 % 16.0 % 37,093 1.9 %
Agriculture S 18,321 0.9 % n/m
Aviation S 16,287 0.8 % 22.7 % 13,269 0.7 %
Financial Institutions L 26,238 1.3 % (3.6 )% 27,205 1.4 %
International Casualty L 65,919 3.3 % 27.0 % 51,902 2.7 %
Marine S 9,262 0.5 % n/m 1,493 0.1 %
Professional Liability L 20,053 1.0 % (3.1 )% 20,696 1.1 %
Property S 100,333   5.1 % (1.1 )% 101,409   5.3 %
299,458 15.2 % 18.3 % 253,067 13.3 %
         
Aggregate Property & Casualty $ 1,968,610   99.9 % 3.6 % $ 1,900,710   99.8 %
 
Life & Annuity:
Life $ 2,848 0.1 % 86.1 % $ 1,530 0.1 %
Annuity     (100.0 )% 1,826   0.1 %
 
Aggregate Life & Annuity $ 2,848   0.1 % (15.1 )% $ 3,356   0.2 %
         
Aggregate Property & Casualty and Life & Annuity $ 1,971,458   100.0 % 3.5 % $ 1,904,066   100.0 %
 
 
S = Short tail lines $ 1,112,708 56.5 % $ 1,071,452 56.4 %
L = Long tail lines 855,902   43.5 % 829,258   43.6 %
Aggregate Property & Casualty $ 1,968,610   $ 1,900,710  
 
Property [b] $ 694,483 35.3 % $ 667,502 35.1 %
Casualty [c] 852,750 43.3 % 811,358 42.7 %
Specialty [d] 421,377   21.4 % 421,850   22.2 %
Aggregate Property & Casualty $ 1,968,610   $ 1,900,710  
 
[a] Comparative period has been re-presented to conform with the current period's presentation.
[b] Property includes property lines of business.
[c] Casualty includes excess liability, financial institutions, general liability, international casualty, medical malpractice, professional liability and workers' compensation lines of business.
[d] Specialty includes accident & health, agriculture, auto, aviation, credit, energy, marine, other, surety and whole account lines of business.
 
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,

2012

 

2011

2012

 

2011

 
Net income (loss) before tax $ (37,290 ) $ 24,047 $ 155,691 $ 55,781
Net realized and unrealized (gains) losses on investments not included in operating income, before tax [a] (888 ) 1,059 (28,964 ) 29,486
Foreign exchange (gains) losses, before tax (71 ) (753 ) (160 ) 1,312
Merger and acquisition expenses, before tax 3,239     3,239  
Net operating income (loss) before tax $ (35,010 ) $ 24,353   $ 129,806   $ 86,579
 
Net income (loss) $ (51,810 ) $ 30,948 $ 143,806 $ 65,282
Net realized and unrealized (gains) losses on investments not included in operating income, net of tax [a] (1,094 ) 1,271 (27,826 ) 30,391
Foreign exchange (gains) losses, net of tax (48 ) (534 ) (116 ) 927
Merger and acquisition expenses, net tax 3,239     3,239  
Net operating income (loss) $ (49,713 ) $ 31,685   $ 119,103   $ 96,600
 
Net income (loss) per diluted share $ (0.54 ) $ 0.30 $ 1.43 $ 0.61
Net realized and unrealized (gains) losses on investments not included in operating income, net of tax [a] (0.01 ) 0.01 (0.28 ) 0.29
Foreign exchange losses, net of tax (0.01 ) 0.01
Merger and acquisition expenses, net of tax 0.03     0.03  
Net operating income (loss) per diluted share $ (0.52 ) $ 0.30   $ 1.18   $ 0.91
 
Weighted average shares outstanding - basic 95,691,699   103,323,377   98,012,424   105,249,683
Weighted average shares outstanding - diluted 95,691,699   104,672,891   100,557,352   106,502,893
 

[a] Net realized and unrealized (gains) losses on investments not included in operating income 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 in run-off and changes in fair value of derivatives, catastrophe bonds and structured deposits.

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