![]() First Quarter 2010 May 10, 2010 Exhibit 99.1 |
![]() 2 Cautionary Note Regarding Forward-Looking Statements This presentation may include forward-looking statements, both with respect to Max and its industry, that reflect its 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 or will be 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. Max believes that 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 effects of emerging claims and coverage issues; (4) changes in general economic conditions, including changes in capital and credit markets; (5) the effect of competition and cyclical trends, including with respect to demand and pricing in the insurance and reinsurance markets; (6) any lowering or loss of financial ratings; (7) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding expectations; (8) the loss of business provided to Max or Harbor Point by their major brokers; (9) the effect on Max’s and Harbor Point’s investment portfolio of changing financial market conditions including inflation, interest rates, liquidity and other factors; (10) tax and regulatory changes and conditions; (11) the integration of Harbor Point or new business ventures Max may enter into; and (12) retention of key personnel, 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 Max’s most recent reports on Form 10-K and Form 10-Qs filed subsequent to, and other documents on file with the Securities and Exchange Commission. Any forward-looking statements made in this presentation are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Max will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Max or its business or operations. Max undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. |
![]() 3 Merger of Equals of two strong organizations Enhances position with clients and brokers Combines “best in class" reinsurance group with a global specialty platform Provides diversified and stable earnings over time Established platforms in all major insurance markets Delivers flexibility to optimize portfolio composition Larger capital base with approximately $3 billion in equity Enhances financial flexibility Strong and deep management and underwriting teams Committed to growth in book value Alterra – A Winning Combination Creates Value for All Shareholders |
![]() 4 Transaction Overview Structure – Stock for stock merger of equals Exchange Ratio – 3.7769 shares of Max for each Harbor Point share – Fixed exchange ratio Pro Forma Ownership – 52% by Harbor Point shareholders (fully diluted) – 48% by Max shareholders (fully diluted) Extraordinary Dividend – $2.50 per share cash dividend (~$304 million) to all shareholders post-closing – Subject to combined board approval Management – Marty Becker – President, Chief Executive Officer and Director – John Berger – Chief Executive Officer of Reinsurance and Vice Chairman of Board Board of Directors – 14 member Board of Directors with 7 directors from each of Harbor Point and Max – Michael O’Reilly, Non-Executive Chairman Approvals – Received shareholder approvals – Awaiting customary regulatory approvals Expected Closing – Second quarter 2010 |
![]() 5 Name Position Marty Becker President, Chief Executive Officer, Director John Berger Chief Executive Officer of Reinsurance, Vice Chairman of Board Peter Minton Chief Operating Officer Joe Roberts Chief Financial Officer Andrew Cook Chief Integration Officer and EVP, Global Development Carol Rivers General Counsel Angelo Guagliano Chief Executive Officer, Insurance David Kalainoff Chief Underwriting Officer, U.S. Reinsurance Adam Mullan Chief Executive Officer, Max at Lloyd’s Wayne Paglieri Chief Operating Officer, Reinsurance Greg Richardson Chief Underwriting Officer, Bermuda Reinsurance Steve Vaccaro Chief Executive Officer, Max Specialty Tom Wafer President, U.S. Reinsurance Combining Strong Management With Deep Experience |
![]() 6 World Class Board Led by Michael O’Reilly Max Harbor Point Name Affiliations Gordon Cheesbrough Deputy Chairman Managing Partner of Blair Franklin Capital Partners, Inc. Former President and CEO of Altamira Investment Services Inc. Former Chairman and CEO of Scotia Capital Markets Marty Becker CEO Chairman and CEO of Max Capital Group Ltd. Former Chairman and CEO of Orion Capital Corporation Bruce Connell Former EVP and Group Underwriting Officer of XL Capital Ltd. Willis King Chairman of First Protective Insurance Company James MacNaughton Former Senior Advisor, Managing Director and Global Partner of Rothschild Inc. Mario Torsiello President and Chief Executive Officer, Torsiello Capital Advisors Inc. James Zech President of High Ridge Capital, LLC. President and CEO of Kinloch Holdings, Inc. Name Affiliations Michael O’Reilly Chairman Retired Vice Chairman and CFO of The Chubb Corporation John Berger Vice Chairman President and CEO of Harbor Point. Former President and CEO of Chubb Re and F&G Re James Carey Deputy Chairman Former Chairman of Paris Re. Senior Principal of Stone Point and a member of the Investment Committees of the Trident Funds Thomas Forrester Retired CFO of The Progressive Corporation Meryl Hartzband Former Director of ACE Limited and Travelers. Chief Investment Officer of Stone Point and a member of the Investment Committees of the Trident Funds Stephan Newhouse Retired President of Morgan Stanley and Chairman of Morgan Stanley International Inc. Andy Rush Founder and Senior Managing Director of Diamond Castle Holdings LLC. Former Managing Director at DLJ Merchant Banking |
![]() 7 Combination provides greater size and scale – Enhances valuation and ratings profile – Provides greater financial flexibility Enhanced position with clients and brokers Platform / underwriters are in place Ability to more efficiently manage capital – Excess capital to support underwriting opportunities or returned to shareholders Combination Enhances Market Profile ____________________ (1) Pro forma for expected post-closing dividend of ~$304 million ($2.50 per share). Before purchase accounting adjustments. (2) Shareholders’ Equity at 12.31.09 Shareholders’ Equity (3/31/10) ($ in billions) (1) $2.1 $1.9 $1.6 $1.6 $1.6 $1.5 (2) $1.4 $7.4 $6.0 $5.4 $4.4 $4.0 $3.8 $3.8 $3.3 $3.2 $3.1 $2.8 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 PRE RE AXS ACGL TRH RNR VR AWH AHL ENH PTP Harbor Point MRH AGII MXGL Ariel FSR |
![]() 8 Global Reach Through Established Platforms Reinsurance Insurance Lloyd’s U.S. Specialty Insurance Major Classes – Agriculture – Aviation – General casualty – Medical malpractice – Professional liability – Property – Marine and energy – Whole account – Workers’ comp – Life and annuity – Aviation – Excess liability – Professional liability – Property – Personal accident – Financial institutions – Professional liability – Property – International casualty treaty reinsurance – General liability – Marine – Property – Miscellaneous professional liability Operating Regions – United States – Latin America – Canada – European Union – Japan – Australia – New Zealand – United States – European Union – United Kingdom – Japan – Denmark – Latin America – United States Offices – Bermuda – Dublin – – New Jersey – Bermuda – Dublin – Hamburg – London – Leeds – Tokyo – Copenhagen – Rio de Janeiro – New York – Los Angeles – Philadelphia – Richmond – Atlanta – Dallas – San Francisco Bogotá |
![]() 9 Max Capital – Global Specialty Underwriter Global underwriter of specialty insurance and reinsurance – Multiple operating platforms – Diversified business profile across specialty classes of business – Highly experienced management with proven track record Opportunistic and disciplined underwriting strategy – Analytical and quantitative underwriting orientation – 5 year average combined ratio of 92% – Generates more stable underwriting results and ROE Strong balance sheet with conservative reserving track record High quality investment portfolio repositioned to reflect traditional underwriting base Q1 2010 2009 Net Premiums Written $217.9 $894.5 Combined Ratio 90.5% 88.1% Cash and Investments $5,344.6 $5,259.1 Shareholders' Equity $1,613.1 $1,564.6 Tangible Equity $1,564.4 $1,515.9 Net Operating Income $40.7 $208.9 Annualized ROE (operating) 10.2% 14.7% 2009 GPW: $1,375 million Q1 2010 GPW: $371 million U.S. Specialty Lloyd’s Life & Annuity 3% 9% 21% 31% 36% Reinsurance Insurance |
![]() 10 Consistent financial performance with first quarter 2010 operating diluted EPS of $0.71 per share P&C premiums written declined 14.6% to $370.3 million as growth from new underwriting teams was offset by increasingly competitive market conditions Net investment income up 19.5% reflects the shift from cash to fixed income picking up additional yield Combined ratio of 90.5% with solid underwriting profits across the organization Catastrophe losses from Q1 events of $9.6mm represent < 1% of shareholders’ equity Diluted book value per share of $27.86, up 27.3% from 3/31/09 and 1.8% since 12/31/09. First Quarter 2010 Highlights – Max Capital |
![]() 11 Harbor Point – "Best in Class" Franchise Formed in 2005 with "A" A.M. Best rating – No legacy exposures Longstanding franchise led by John Berger – Chubb Re management team and book of business Diversified reinsurer with an excellent track record Strong and experienced Board – Michael O’Reilly, formerly Vice Chairman & CFO of The Chubb Corporation, will be Chairman of Alterra Sophisticated, knowledgeable shareholder group – Stone Point Capital and The Chubb Corporation are largest investors Q1 2010 2009 Net Premiums Written $299.5 $601.9 Combined Ratio 94.3% 80.6% Cash and Investments $2,685.2 $2,585.0 Shareholders' Equity $1,926.1 $1,889.7 Tangible Equity $1,668.1 $1,631.8 Net Operating Income $26.9 $180.9 Annualized ROE (operating) 5.6% 10.1% Casualty Property Specialty 2009 GPW: $608 million Q1 2010 GPW: $307 million 49% 36% 15% |
![]() 12 First quarter 2010 net income of $33.5 million $306.6 million of premiums written up from $228.5 million in the first quarter 2009 Premium growth primarily in Specialty lines due to favorable opportunities in crop and trade credit Q1 2010 premiums written split between Property, 31%, Casualty, 33%, and Specialty 36% Combined ratio of 94.3% Catastrophe losses from Q1 events of $35 million represent < 2% of shareholders’ equity Growth in tangible equity to $1,668.1 million at 3/31/2010 from $1,631.8 million at 12/31/2009 First Quarter 2010 Highlights – Harbor Point |
![]() 13 (1) Strong operational flexibility, well positioned to support opportunistic growth over time ____________________ (1) Pro forma for expected post-closing dividend of ~$304 million ($2.50 per share). Before purchase accounting adjustments. Conservative Operating Leverage As of March 31, 2010 ($ millions) Max Harbor Point Gross Premiums Written $371.1 $306.6 $677.7 Net Premiums Written $217.9 $299.5 $517.4 Retention 59% 98% 76% Shareholders' Equity $1,613.1 $1,926.1 $3,235.2 Combined Ratio 90.5% 94.3% 92.1% Net Operating Income $40.7 $26.9 $67.6 Annualized ROE (operating) 10.2% 5.6% 8.5% LTM NPW/March 31 Equity 0.52x 0.35x 0.47x |
![]() 14 (1) Well-positioned balance sheet with conservative financial leverage vs. 16.0% average for peer group (2) ____________________ (1) Pro forma for expected post-closing dividend of ~$304 million ($2.50 per share). Before purchase accounting adjustments. (2) Peer group average as of 12/31/09. Strong Financial Position As of March 31, 2010 ($ millions) Max Harbor Point Cash and Investments $5,344.6 $2,685.2 $7,725.8 Loss & LAE Reserves $4,527.3 $762.5 $5,289.8 Debt $90.5 $200.0 $290.5 Shareholders' Equity $1,613.1 $1,926.1 $3,235.2 Total Debt / Capitalization 5.3% 9.4% 8.2% |
![]() 15 Harbor Point 2009 GPW = $1,983 million A compelling strategic fit, with limited overlap 2009 GPW = $608 million Max 2009 GPW = $1,375 million ____________________ Note: Before intercompany eliminations of gross premiums written of approximately $36 million. Short-tail Long-tail Short-tail Long-tail Short-tail Long-tail Insurance Reinsurance U.S. Specialty Lloyd’s Life & Annuity Reinsurance Insurance Reinsurance U.S. Specialty Lloyd’s Life & Annuity Diversified and Balanced Business Mix 3% 9% 21% 31% 36% 47% 53% 100% 48% 52% 2% 7% 14% 22% 55% 47% 53% |
![]() 16 Long-Tail Short-Tail 2009 GPW = $1,983 million Line of Business ____________________ Note: Before intercompany eliminations of gross premiums written of approximately $36 million. (1) Includes Reinsurance segment (55.3%), Life & Annuity reinsurance (2.2%) and reinsurance written through Lloyd’s platform (4.2%). North America Europe Other Other Short-Tail Agriculture Marine & Energy Property Aviation Auto Professional Liability Medical Malpractice General Casualty Workers’ Comp / Clash Life Other Long-Tail Reinsurance Insurance (1) Alterra Will Have a Diversified Portfolio of Business 30% 4% 2% 5% 15% 1% 5% 5% 6% 3% 21% 3% 62% 38% 6% 16% 78% |
![]() 17 2009 GPW = $489 million 2009 GPW = $608 million 2009 GPW = $1,097 million Property Casualty Specialty Property Workers’ Compensation General Casualty Auto Professional Liability Marine & Energy Aviation Agriculture Other Specialty Property General Casualty Professional Marine & Energy Aviation Agriculture Other Specialty Property Workers’ Compensation General Casualty Medical Malpractice Professional Liability Marine & Energy Aviation Agriculture Other Specialty Auto WCC / Clash Credit Credit Medical Malpractice Max - Reinsurance Harbor Point Business lines written by Max and Harbor Point are similar Businesses are complementary and leverage different areas of expertise Harbor Point tends to focus on larger accounts than Max ____________________ Note: Before intercompany eliminations of gross premiums written. Q1 2010 GPW = $155 million Q1 2010 GPW = $307 million Q1 2010 GPW = $462 million Complementary Portfolio of Business: Reinsurance 10% 28% 9% 20% 5% 10% 2% 5% 6% 3% 2% |
![]() 18 $8.0 Billion Harbor Point Max Fixed Income Other Investments Cash / Short Term Fixed Income Other Investments Cash / Short Term Fixed Income Other Investments Cash / Short Term As of March 31, 2010 Conservative Investment Posture 13% 6% 81% 22% 4% 74% 16% 6% 78% $5.3 Billion $2.7 Billion |
![]() 19 $7.6 Billion Conservatively positioned Average rating of "AA“ 68% in cash and short-term investments, U.S. Government and Agencies, and AAA securities Duration of 3.8 years U.S. Gov’t and Agencies Cash and Short- Term Investments AAA AA A BBB BB or Lower As of March 31, 2010 High Quality Fixed Income Portfolio 17% 18% 33% 8% 18% 3% 3% |
![]() 20 Compelling Transaction for Alterra Shareholders Max shareholders merge with a “best in class” reinsurance franchise Harbor Point shareholders merge with a global specialty insurer and reinsurer Capital of ~$3 billion enhances market position with clients and brokers Ability to fully capitalize on market opportunities in a soft or hard market Capital benefit – $304 million expected post-closing dividend Key Harbor Point shareholders committed to this transaction Alterra shareholders will benefit from stronger, more stable book value growth over time |
![]() 21 Alterra means "high ground" — a place of security Alterra Capital Holdings Limited Bermuda Ireland United States Lloyd’s Latin America |
![]() 22 Appendix |
![]() 23 Primary Shares Outstanding (2) 57.4 62.5 119.9 Warrant Shares 0.7 8.9 9.6 Weighted average strike price $16.01 $22.62 $22.12 Option Shares 1.7 2.2 3.9 Weighted average strike price $22.32 $26.64 $24.76 Shares Outstanding ____________________ Note: Before the impact of the expected post-closing dividend of ~$304 million ($2.50 per share). (1) Based on exchange ratio of 3.7769 shares of Max for each Harbor Point share. (2) Includes restricted shares/units. As of March 31, 2010 Millions, except per share amounts Harbor Point Max (1) |
![]() 24 Harbor Point – Financial Highlights Shareholders’ Equity ($ in millions) Premiums Written ($ in millions) Combined Ratio 2009 Gross Premiums Written Casualty Property Specialty NPW GPW Loss & LAE Ratio Expense Ratio Total = $608 Million 49% 36% 15% $642.6 $672.5 $511.7 $607.5 $601.9 $506.8 $567.9 $590.4 $0 $100 $200 $300 $400 $500 $600 $700 2006 2007 2008 2009 49.1% 38.7% 33.3% 36.3% 44.3% 69.9% 47.3% 43.7% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 2006 2007 2008 2009 86.0% 92.8% 103.2% 80.6% $1,889.7 $1,691.5 $1,579.0 $1,461.9 $0 $400 $800 $1,200 $1,600 $2,000 2006 2007 2008 2009 |
![]() 25 Property Casualty Specialty Total 2009 GPW: $296 million 2009 GPW: $221 million 2009 GPW: $91 million 2009 GPW: $608 million Per Risk Catastrophe Excess of Loss Crop Quota Share Marine/Energy Credit Multi-line Aviation Property Casualty Specialty Quota Share Harbor Point Has A Well-Diversified Portfolio of Business 5% 20% 75% 14% 86% 26% 16% 4% 31% 23% 49% 36% 15% $220.9 $225.3 $313.4 $220.4 $0 $100 $200 $300 $400 2006 2007 2008 2009 $295.9 $246.6 $282.3 $296.3 $0 $100 $200 $300 $400 2006 2007 2008 2009 $90.8 $39.8 $76.8 $126.0 $0 $100 $200 $300 $400 2006 2007 2008 2009 $607.5 $511.7 $672.5 $642.6 $0 $100 $200 $300 $400 $500 $600 $700 $800 2006 2007 2008 2009 |
![]() 26 Premiums Written ($ in millions) 2009 Gross Premiums Written Shareholders’ Equity ($ in millions) Combined Ratio Loss & LAE Ratio Expense Ratio U.S. Specialty Max at Lloyd’s Life & Annuity Reinsurance Insurance Reinsurance Total = $1,375 million Max – Financial Highlights 36% 31% 3% 9% 21% $865.2 $1,078.3 $1,254.3 $1,375.0 $634.7 $796.6 $840.2 $894.5 $0 $300 $600 $900 $1,200 $1,500 2006 2007 2008 2009 18.7% 24.2% 23.0% 25.7% 62.4% 68.9% 64.0% 67.7% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 2006 2007 2008 2009 88.2% 86.4% 91.9% 88.1% NPW GPW $1,564.6 $1,280.3 $1,583.9 $1,390.1 $0 $400 $800 $1,200 $1,600 $2,000 2006 2007 2008 2009 |
![]() 27 Insurance (31% of GPW) Reinsurance (36% of GPW) Professional Liability Property Excess Liability Aviation Excess Liability Property Aviation Workers Comp. Professional Liability Other Med. Mal. Marine & Energy Agriculture 2009 GPW: $428 million 2009 GPW: $489 million Max Has a Strong Market Position in Specialty Classes … 15% 42% 27% 16% 3% 15% 18% 16% 17% 7% 6% 4% 14% $427.8 $389.4 $382.9 $396.6 $300 $400 $500 2006 2007 2008 2009 $489.0 $419.5 $345.2 $423.6 $300 $400 $500 2006 2007 2008 2009 |
![]() 28 U.S. Specialty (21% of GPW) Max at Lloyd’s (9% of GPW) 2009: $285 million 2009: $129 million Launched in 2007 Nationwide niche E&S underwriter – 91% non-admitted 2009 combined ratio = 99.5% Acquired in November 2008 Direct and reinsurance 3 syndicates under management 2009 combined ratio = 86.3% Professional Liability Property Marine General Casualty Property Aviation Fin. Institutions Prof. Liability Accident & Health …With an Attractive Position in the U.S. Market and Lloyd’s 47% 1% 21% 31% 47% 15% 18% 2% 18% |