Partially offsetting these positive rating attributes is the current soft market in casualty classes of business, which represents a significant portion of Alterra’s risk portfolio, and a challenging investment climate that places increased pressure on underwriting profitability.

Rating factors that could lead to a downgrade or revision in the outlook to negative include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to peers, significant adverse loss reserve development, a material decline in risk-adjusted capital and/or the departure of one or more key employees. Alternatively, factors that could lead to an upgrade include continued favorable operating profitability coupled with maintenance of strong risk-adjusted capital levels.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for Alterra Bermuda Limited and its following operating affiliates:

• Alterra Europe plc

• Alterra America Insurance Company

• Alterra Excess and Surplus Insurance Company

• Alterra Reinsurance USA Inc.
The following debt ratings have been affirmed:

Alterra USA Holdings Limited (guaranteed by Alterra Capital Holdings Limited)—
--“bbb” on $100 million 7.2% senior secured notes, due 2017

Alterra Finance, LLC (guaranteed by Alterra Capital Holdings Limited)—
--“bbb” on $350 million 6.25% senior unsecured notes, due 2020
The following indicative ratings under the current shelf registration have been affirmed:

Alterra Capital Holdings Limited
--“bbb” on senior unsecured debt
--“bbb-” on subordinated debt
--“bb+” on preferred stock

Alterra USA Holdings Limited (guaranteed by Alterra Capital Holdings Limited)—
--“bbb” on senior secured debt
--“bbb-” on subordinated debt

Alterra Capital Trust I (guaranteed by Alterra Capital Holdings Limited)—
--“bb+” on preferred securities

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; “Catastrophe Analysis in A.M. Best Ratings”; “Insurance Holding Company and Debt Ratings”; and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

If you liked this article you might like

Alterra Reaches New 52-Week High (ALTE)

Jim Cramer: Real-World Deals

Cramer's 'Mad Money' Recap: Forget About Washington

Alterra Stock To Go Ex-dividend Tomorrow (ALTE)

Alterra Stock To Go Ex-dividend Tomorrow (ALTE)