Alterra Capital Holdings Limited May 2010 Exhibit 99.1 |
2 This presentation may include forward-looking statements that reflect Alterra’s 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. Alterra 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 Alterra by their major brokers; (9) the effect on Alterra’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 Max and Harbor Point or new business ventures Alterra 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 Alterra’s most recent report 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 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. |
Max Capital Group Ltd. and Harbor Point Limited have merged to form Alterra Capital Holdings Limited. 3 |
Alterra means “high ground” We have chosen Alterra as our new brand name, as we believe the company will be a provider of superior security for our clients a market leader at the pinnacle of our industry. 4 ––— |
5 Key Investment Highlights – Enhanced market position from merger of equals between Max and Harbor Point – Diversified specialty insurance and reinsurance company – Established platforms in major global markets – flexibility to optimize portfolio composition – Strong and deep management teams with disciplined underwriting track record – Strong balance sheet with total assets of $10 billion and equity of $3 billion – Strong capital and liquidity position with conservative financial and operating leverage – Conservative investment posture with a high quality fixed income portfolio |
6 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 and Secretary 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 Strong Management With Deep Experience |
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 return to shareholders ____________________ (1) Pro forma for amalgamation of Max and Harbor Point, including estimated purchase accounting adjustments and the impact of expected special dividend of ~$304 million ($2.50 per share). (2) Shareholders’ equity at 12/31/09. Shareholders’ Equity (3/31/10) ($ 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 $3.1 $3.0 $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 Combination Enhances Market Profile |
8 Local Knowledge Global Reach Established Platforms Worldwide Reinsurance Insurance Lloyd’s U.S. Specialty Insurance Major Classes – Agriculture – Aviation – General casualty – Life and annuity – Marine and energy – Medical malpractice – Professional liability – Property – Surety, credit & political risk – Whole accoun t – Workers’ comp – Aviation – Excess liability – Professional liability – Property – Financial institutions – International casualty treaty reinsurance – Personal accident – Professional liability – Property – General liability – Marine – Miscellaneous professional liability – Property Operating Regions – Australia – Canada – European Union – Japan – Latin America – New Zealand – United States – European Union – United States – Denmark – Japan – Latin America – United Kingdom – United States Offices – Bermud a – Bogotá – Dublin – London – New Jersey – Bermuda – Dublin – Hamburg – Copenhagen – Leeds – London – Rio de Janeiro – Tokyo – Atlanta – Dallas – Los Angeles – New York – Philadelphia – Richmond – San Francisco |
9 Strong Financial Profile ____________________ Note: Pro forma for the amalgamation of Max and Harbor Point, including estimated purchase accounting adjustments. (1) Reflects the impact of expected special dividend of ~$304 million ($2.50 per share) and transaction-related amalgamation costs. 2009 Q1 2010 Q1 2010 Post Dividend (1) Gross Premiums Written $1,946.4 $676.8 $676.8 Net Premiums Written $1,496.4 $517.4 $517.4 Operating Income $393.0 $67.5 $64.5 Net Income $429.4 $61.2 $58.2 Shareholders’ Equity $3,202.6 $3,287.5 $2,958.4 Operating ROE 13.3% 8.3% 8.9% Combined Ratio 85.0% 92.1% 92.1% Diluted Book Value Per Share $26.86 $27.28 $24.32 ($ in millions) |
10 Max Capital – Global Specialty Underwriter – Global underwriter of specialty insurance and reinsurance • Multiple operating platforms • Diversified business profile across specialty classes of business – 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 reflects traditional underwriting base 2009 GPW: $1,375 million U.S. Specialty Lloyd’s Life & Annuity 3% 9% 21% 31% 36% Reinsurance Insurance 2009 Q1 2010 Net Premiums Written $894.5 $217.9 Combined Ratio 88.1% 90.5% Cash and Investments $5,259.1 $5,344.6 Shareholders' Equity $1,564.6 $1,613.1 Tangible Equity $1,515.9 $1,564.4 Net Operating Income $208.9 $40.7 Annualized ROE (operating) 14.7% 10.2% |
11 2009 Q1 2010 Net Premiums Written $601.9 $299.5 Combined Ratio 80.6% 94.3% Cash and Investments $2,585.0 $2,685.2 Shareholders' Equity $1,889.7 $1,926.1 Tangible Equity $1,631.8 $1,668.1 Net Operating Income $184.1 $26.9 Annualized ROE (operating) 10.3% 5.6% Harbor Point – "Best in Class" Reinsurance 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, is Chairman of Alterra – Sophisticated, knowledgeable shareholder group • Stone Point Capital and The Chubb Corporation are largest investors Casualty Property Specialty 2009 GPW: $608 million 49% 36% 15% |
12 30% 4% 2% 15% 3% 21% 3% 6% 5% 5% 1% 5% Diversified Portfolio of Business Global Platform… …Across Lines of Business ____________________ Note: Before intercompany eliminations of gross premiums written of approximately $36 million. 78% 6% 16% 55% 22% 14% 2% 7% 2009 GPW = $1,983 million North America Europe Other Insurance Reinsurance U.S. Specialty Lloyd’s Life & Annuity Other Short-Tail Agriculture Marine & Energy Property Aviation Auto Professional Liability Medical Malpractice General Casualty Workers ’ Comp / Clash Life Other Long-Tail Short-Tail Long-Tail |
13 Strong Q1 2010 Results Max Capital Harbor Point – Q1 2010 catastrophe losses of $9.6 million • < 1% of shareholders’ equity • 5 points on combined ratio – Q1 2010 catastrophe losses of $35 million • < 2% of shareholders’ equity • 24 points on combined ratio ($ in millions) First Quarter 2009 2010 Gross Premiums Written $434.3 $371.1 Net Premiums Written $269.9 $217.9 Net Investment Income $40.5 $48.4 Operating Income $46.9 $40.7 Annualized Operating ROE 14.8% 10.2% Combined Ratio 89.7% 90.5% First Quarter ($ in millions) 2009 2010 Gross Premiums Written $228.5 $306.6 Net Premiums Written $224.4 $299.5 Net Investment Income $18.7 $16.5 Operating Income $40.8 $26.9 Annualized Operating ROE 9.5% 5.6% Combined Ratio 82.0% 94.3% |
14 Conservative Operating Leverage – Strong operational flexibility, well positioned to support opportunistic growth over time ($ in millions) vs. 0.62x average for peer group ____________________ Note: Pro forma for the amalgamation of Max and Harbor Point, including estimated purchase accounting adjustments. (1) Reflects the impact of expected special dividend of ~$304 million ($2.50 per share) and transaction-related amalgamation costs. 2009 Q1 2010 Q1 2010 Post Dividend (1) Gross Premiums Written $1,946.4 $676.8 $676.8 Net Premiums Written $1,496.4 $517.4 $517.4 Retention 76.9% 76.4% 76.4% Shareholders' Equity $3,202.6 $3,287.5 $2,958.4 Net Operating Income $393.0 $67.5 $64.5 Combined Ratio 85.0% 92.1% 92.1% 2009 NPW / Equity 0.47x 0.46x 0.51x |
15 Strong Financial Position – Well-positioned balance sheet with conservative financial leverage ($ in millions) vs. 17.4% average for peer group ____________________ Note: Pro forma for the amalgamation of Max and Harbor Point, including estimated purchase accounting adjustments. (1) Reflects the impact of expected special dividend of ~$304 million ($2.50 per share) and transaction-related amalgamation costs. 2009 Q1 2010 Q1 2010 Post Dividend (1) Cash and Investments $7,844.1 $8,029.7 $7,725.6 Loss & LAE Reserves $5,222.1 $5,248.5 $5,248.5 Debt $290.5 $290.5 $290.5 Shareholders' Equity $3,202.6 $3,287.5 $2,958.4 Total Debt / Capitalization 8.3% 8.1% 8.9% |
16 Strong Liquidity and Credit Ratings – Credit facility with $200 million of additional borrowing capacity • $200 million currently drawn under credit facility due June 2012 – Only other debt maturity is $90.5 million of senior notes due April 2017 – Strong credit ratings: Moody's S&P Fitch AM Best Senior Unsecured Rating Baa2 BBB BBB+ bbb Financial Strength Rating A3 A- A- A Outlook Stable Stable Stable Stable |
17 Capitalization Profile As of March 31, 2010 ($ in millions) Actual Dividend / Transaction Costs (1) Post Dividend (1) Senior notes due April 2017 $90.5 $90.5 Bank debt 200.0 200.0 Total debt $290.5 $290.5 Shareholders' equity $3,287.5 ($329.1) $2,958.4 Total capitalization $3,578.0 $3,248.9 Debt / total capitalization 8.1% 8.9% ____________________ Note: Pro forma for the amalgamation of Max and Harbor Point, including estimated purchase accounting adjustments. (1) Reflects the impact of expected special dividend of ~$304 million ($2.50 per share) and transaction-related amalgamation costs. |
18 Investment Portfolio Highlights – High quality, liquid portfolio with 94.1% allocated to cash and fixed maturities • Cash balance of $1,294.1 million (16.1% of portfolio) as of March 31, 2010 – High quality fixed income portfolio with an average rating of “AA” • 68% in cash and short-term investments, U.S. government and agencies, and AAA securities • Average duration of 3.8 years – Minimal exposure to selected asset classes • CMBS of $354.0 million (4.4% of portfolio) – average rating of Aa2/AA • ABS of $99.7 million (1.2% of portfolio) • RMBS of $1,163.0 million (14.5% of portfolio) – 89% agency-backed • No CDO’s, CLO’s, SIV’s or other highly structured securities ____________________ Note: Does not reflect the impact of expected special dividend of ~$304 million ($2.50 per share) and transaction-related amalgamation costs. |
19 6% 16% 12% 8% 37% 14% 4% 1% 2% Conservative Investment Posture ____________________ Note: Does not reflect the impact of expected special dividend of ~$304 million ($2.50 per share) and transaction-related amalgamation costs. As of March 31, 2010 Portfolio Composition Cash and Fixed Income Portfolio by Rating $7.6 billion $8.0 billion 17% 18% 33% 8% 18% 3% 3% U.S. Gov’t and Agencies Cash and Short- Term Investments AAA AA A BBB BB or Lower Cash / Short Term U.S. Gov’t and Agencies Other Investments Non-U.S. Gov’t Corporate Securities Municipal Securities ABS RMBS CMBS Cash / Short Term Fixed Income Other Investments |
20 Key Investment Highlights – Enhanced market position from merger of equals between Max and Harbor Point – Diversified specialty insurance and reinsurance company – Established platforms in major global markets – flexibility to optimize portfolio composition – Strong and deep management teams with disciplined underwriting track record – Strong balance sheet with total assets of $10 billion and equity of $3 billion – Strong capital and liquidity position with conservative financial and operating leverage – Conservative investment posture with a high quality fixed income portfolio |
21 Appendix |
22 $299.5 $642.6 $672.5 $511.7 $607.5 $306.6 $601.9 $506.8 $567.9 $590.4 $0 $100 $200 $300 $400 $500 $600 $700 2006 2007 2008 2009 Q1 2010 36% 49% 15% 63.7% 49.1% 38.7% 33.3% 36.3% 30.6% 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 Q1 2010 86.0% 92.8% 103.2% 94.3% 80.6% $1,926.1 $1,889.7 $1,691.5 $1,579.0 $1,461.9 $0 $400 $800 $1,200 $1,600 $2,000 2006 2007 2008 2009 Q1 2010 Harbor Point – Financial Highlights 2009 Gross Premiums Written Premiums Written ($ in millions) Combined Ratio Shareholders’ Equity ($ in millions) Casualty Property Specialty NPW GPW Loss & LAE Ratio Expense Ratio Total = $608 million |
23 Harbor Point Has A Well-Diversified Portfolio of Business Property 2009 GPW: $221 million Casualty Specialty Total 2009 GPW: $296 million 2009 GPW: $91 million 2009 GPW: $608 million 15% 36% 49% 75% 20% 5% 86% 14% 23% 31% 4% 16% 26% Quota Share Per Risk Catastrophe Excess of Loss Crop Quota Share Marine/Energy Credit Multi-line Aviation Property Casualty Specialty $102.1 $295.9 $246.6 $282.3 $296.3 $0 $100 $200 $300 $400 2006 2007 2008 2009 Q1 2010 $110.2 $90.8 $39.8 $76.8 $126.0 $0 $100 $200 $300 $400 2006 2007 2008 2009 Q1 2010 $306.6 $607.5 $511.7 $672.5 $642.6 $0 $200 $400 $600 $800 2006 2007 2008 2009 Q1 2010 $220.4 $313.4 $225.3 $220.9 $94.3 $0 $100 $200 $300 $400 2006 2007 2008 2009 Q1 2010 |
24 Max – Financial Highlights 2009 Gross Premiums Written Premiums Written ($ in millions) Combined Ratio Shareholders’ Equity ($ in millions) Total = $1,375 million U.S. Specialty Max at Lloyd’s Life & Annuity Reinsurance Insurance Reinsurance $1,613.1 $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 Q1 2010 $217.9 $865.2 $1,078.3 $1,254.3 $1,375.0 $371.1 $634.7 $796.6 $840.2 $894.5 $0 $300 $600 $900 $1,200 $1,500 2006 2007 2008 2009 Q1 2010 NPW GPW 64.6% 18.7% 24.2% 23.0% 25.7% 25.9% 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 Q1 2010 88.2% 86.4% 91.9% 88.1% 90.5% 21% 9% 3% 31% 36% Loss & LAE Ratio Expense Ratio |
25 Max Has a Strong Market Position in Specialty Classes … Insurance (31% of 2009 GPW) Reinsurance (36% of 2009 GPW) 2009 GPW: $428 million 2009 GPW: $489 million 16% 27% 42% 15% Professional Liability Property Excess Liability Aviation General Casualty Property Aviation Workers Comp. Professional Liability Other Med. Mal. Marine & Energy Agriculture 17% 7% 6% 4% 14% 15% 18% 16% 3% $66.4 $427.8 $389.4 $382.9 $396.6 $0 $100 $200 $300 $400 $500 2006 2007 2008 2009 Q1 2010 $154.9 $489.0 $419.5 $345.2 $423.6 $0 $100 $200 $300 $400 $500 2006 2007 2008 2009 Q1 2010 |
26 …With an Attractive Position in the U.S. Market and Lloyd’s – Launched in 2007 – Nationwide niche E&S writer • 91% non-admitted – 2009 combined ratio = 99.5% – Acquired in November 2008 – Insurance and reinsurance – 3 syndicates under management – 2009 combined ratio = 86.3% U.S. Specialty (21% of 2009 GPW) Max at Lloyd’s (9% of 2009 GPW) 2009 GPW: $285 million 2009 GPW: $129 million 18% 2% 18% 15% 47% 31% 21% 1% 47% Professional Liability Property Marine General Liability Property Aviation Fin. Institutions Prof. Liability Accident & Health |