Investor Presentation Second Quarter 2010 Exhibit 99.1 |
2 Cautionary Note Regarding Forward-Looking Statements 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 its 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 Harbor Point Limited 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 |
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 |
5 P&C Sector Offers Tremendous Value Opportunity P&C stocks are trading at 25 year low price to book multiples The fundamental environment remains challenging BUT we are getting closer to the inflection point as. . . Profitable growth opportunities are tough to find Continued historic low interest rates are pressuring investment returns Cash flow levels deteriorate Major industry loss events generate high catastrophe losses Reserve redundancies at many companies are diminishing Players beginning to self-assess lines or strategy Excess capital positions are managed through aggressive share repurchase Attractive time to build positions as low sector valuation levels provide downside protection Alterra valuation even more compelling at 0.74x times book value at June 30, 2010 ____________________ Based on stock price as of 8/27/2010. |
6 Platform Positioned to Grow Shareholder Value Alterra – A Winning Combination Formed by the merger of Max Capital and Harbor Point in May 2010 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 |
7 Global Diversified Platform Global underwriter of specialty insurance and reinsurance Multiple operating platforms - Bermuda, Dublin, United States, Lloyd's, Latin America Diversified business profile across specialty classes of business Opportunistic and disciplined underwriting strategy Strong culture of risk management Analytical and quantitative underwriting orientation 5 year average combined ratio, with cats, of 86.2% Strong, liquid balance sheet with conservative reserving track record Shareholders equity ~ $3 billion at 6/30/10 Low operating and financial leverage provides enhanced flexibility Focus on capital management – returned $367 million or ~12% of proforma 12/31/09 shareholders' equity(1) in 2010 through dividends and share repurchases Rated “A” (Excellent) by AM Best ____________________ (1) Shareholders' equity of Max Capital and Harbor Point on a combined pro forma basis. Short- Tail 50% Long-Tail 50% 2009 Pro Forma Insurance 39% Reinsurance 61% |
8 Second Quarter Results Second quarter 2010 net operating diluted EPS of $0.64 per share P&C gross premiums written grew 12% to $398.2 million driven by the inclusion of Harbor Point and the continued build-out of our Lloyd’s and U.S. Specialty businesses Net investment income up 27.6% to $53.3 million reflects additional cash and invested assets from the merger and the shift from cash to fixed income picking up additional yield Combined ratio of 83.3% with solid underwriting profits across the organization Catastrophe losses from Q2 events of $20.3 million represent < 0.6% of shareholders’ equity Diluted book value per share of $24.55 at 6/30/10 P&C GPW (12% increase) Operating Diluted EPS (1) Operating ROE 14.6% 10.1% Combined ratio 90.8% 83.3% Profitable Growth in Gross Premiums Written… …With Solid Operating EPS $0.64 $0.83 Q2 '09 Q2 '10 $398.2 $355.5 Q2 '09 Q2 '10 (1) Excludes $0.61 per share of negative goodwill gain net of merger and acquisition expenses. |
9 2004 Insurance Property 2003 Insurance Excess Liability Professional Liability 2005 Reinsurance Property / Property Cat Harbor Point formed 2006 Insurance Aviation 2008 Lloyd's Insurance Financial Institutions Prof. Indemnity Lloyd's Reinsurance Accident / Health Property 2007 U.S. E&S Insurance Property Inland Marine U.S. Casualty Reinsurance Multi Peril Crop Experienced & highly quantitative underwriting teams Lead underwriters average over 20 years in the business High percentage of employees hold professional designations 2009 Lloyd's Casualty (non U.S.) A&H Insurance U.S. Specialty Professional Liability Latin America Reinsurance 2002 Traditional Re Workers' Comp Medical Malpractice GL / PL Aviation Identifying & Recruiting "Franchise Players" Has Been Instrumental In Our Success 2010 Alterra formed by the merger of Max Capital and Harbor Point |
10 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 account Workers’ comp Aviation Excess liability Professional liability Property Aviation Accident and Health Financial institutions International casualty treaty Personal accident treaty Professional liability Property treaty 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 Bermuda Bogotá Buenos Aires Dublin London New Jersey Bermuda Dublin Hamburg Zurich Copenhagen Leeds London Rio de Janeiro Tokyo Atlanta Dallas New York Philadelphia Richmond San Francisco Sebastopol Local Knowledge Global Reach |
11 9% 4% 9% 4% 7% 5% 19% 28% 6% 9% Insurance (22% of pro forma 2009 GPW) Reinsurance (55% of pro forma 2009 GPW) Professional Liability Property Excess Liability Aviation General Casualty Property Aviation Workers Comp. Professional Liability Other Med. Mal. Marine & Energy Agriculture 2009 GPW: $427.7 million 2009 pro forma GPW: $1,060.4 million H1 2010 GPW: $198.7 million H1 2010 GPW: $657.8 million = pro forma 16% 27% 42% 15% Auto $198.7 $427.8 $389.4 $382.9 $396.6 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 2006 2007 2008 2009 H1 '10 $423.6 $345.2 $419.5 $489.0 $274.4 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 2006 2007 2008 2009 H1 '10 $1,060.4 $657.8 ____________________ Note: Pro forma gross premium written (“GPW”) represents the combined GPW of Max Capital and Harbor Point net of intercompany eliminations of GPW. Alterra Has a Strong Market Position in Specialty Classes … |
12 U.S. Specialty (15% of pro forma 2009 GPW) Alterra at Lloyd’s (7% of pro forma 2009 GPW) …With an Attractive Position in the U.S. Market and Lloyd’s Professional Liability Property Marine General Casualty Property Aviation Fin. Institutions Prof. Liability Accident & Health 47% 1% 21% 31% 47% 15% 18% 2% 18% H1 2010: $174.4 million H1 2010: $120.9 million 2009: $285.5 million 2009: $129.0 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% |
13 29% 2% 3% 5% 15% 4% 21% 3% 6% 5% 5% 1% Long-Tail Short-Tail North America Europe Other Other Short-Tail Agriculture Marine & Energy Property Aviation Auto Professional Liability Medical Malpractice General Casualty Workers’ Comp / Clash Life + A&H Whole Account Reinsurance Insurance (1) 6% 16% 78% Mixed 39% 61% 2009 pro forma GPW = $1,946 million H1 2010 pro forma GPW = $1,153 million ____________________ Note: 2009 and 2010 pro forma data after intercompany eliminations of gross premiums written. (1) Includes Reinsurance segment (54.5%), Life & Annuity reinsurance (2.2%) and reinsurance written through Lloyd’s platform (4.2%). Diversified Balanced Business Mix Global Platform Line of Business |
14 ____________________ Source: Company filings. Diversified reinsurers include RE, AXS, ACGL, TRH, PRE, AWH, ENH, AHL, PTP, AGII, ALTE and ORH for historical years . Property focused reinsurers include RNR, VR, MRH, FSR and IPCR for historical years. Diversified Reinsurers Property Focused Reinsurers Median 201% 55% 61% 89% 66% 94% Median 116% 84% 82% 95% 84% 92% Alterra 106% 86% 88% 92% 88% 92% Diversified Platforms Generate More Consistent Margins Alterra has performed well within its diversified peer group with less volatility than property focused reinsurers |
15 Peer PML’s as a Percent of Common Equity 12.3% 12.0% 14.8% 8.9% 24.6% 23.1% 20.6% 21.8% 11.2% 15.0% 17.7% 18.0% 18.1% 19.3% 19.6% 32.2% 30.0% 29.6% 29.1% 0% 10% 20% 30% 40% VR FSR ENH AXS ACGL RE AHL PTP TRH AWH 1-in-100 Year (if disclosed) 1-in-250 Year ____________________ Note: RNR, MRH and PRE do not disclose their PMLs for either 1-in-100 year events or 1-in-250 year events. (1) 1-in-100 PML and 1-in-250 for U.S. hurricane is $886 mm and $1,159 mm, respectively. Maximum zonal aggregate is $2.0 billion for U.S. hurricane and California earthquake. (2) Self-imposed limit of 25% of total capital. (3) 1-in-100 PML for U.S. hurricane is $1,091 mm based on an industry loss modeled at $121 billion. 1-in-250 for U.S. hurricane is $1,456 mm based on an industry loss modeled at $195 billion. (4) Tri-county Florida is the largest zonal exposure. Northeast wind was $733 mm. Self-imposed limit of 25% of common equity. (5) Self-imposed limit of 16% of total capital. (6) 1-in-100 PML for U.S. wind is $309 mm. 1-in-250 for U.S. quake is $287 mm, and 1-in-250 for U.S. wind of $390 mm. Historically, 1-in-100 was approximately 12% of total capital. 6/30/10 Com. Equity: $3,602.9 $1,196.3 $2,650.6 $4,995.3 $4,073.0 $6,035.6 $2,950.3 $2,927.0 $2,105.4 $4,049.6 $3,468.5 (1) (2) (2), (3) (4) (5) (6) |
16 1.2% 1.3% 1.3% 2.4% 2.1% 2.1% 2.5% 3.2% 3.3% 4.4% 4.1% 4.1% 4.1% 5.4% 6.1% 0.1% 0.2% 0.3% 0.4% 0.3% 0.6% 0.6% 0.6% 0.8% 0.9% 1.0% 0.2% 1.5% 1.3% 1.5% 1.6% 2.4% 2.4% 2.5% 3.1% 3.8% 3.8% 4.4% 5.0% 5.0% 5.1% 5.5% 7.6% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Initial Estimate Revised Estimate 2 Losses $305.7 $95.1 $105.0 $306.0 $60.0 $317.0 $122.7 $112.2 $125.0 $124.0 $77.7 $63.0 $26.0 $58.0 $43.0 ____________________ Source: Company filings and press releases; losses are generally disclosed net of tax and net of reinstatement premiums. (1) Q2 net losses reflect only losses from the Chilean earthquake. Initial losses include the Chilean earthquake and Windstorm Xynthia. (2) Q2 net losses reflect Q1 estimates plus reported development, if any. (3) Initial loss estimate reflects 50% to 90% of Reuters consensus net operating earnings prior to the earthquake, based on disclosure that net income would remain positive for the quarter. (4) Initial estimates based on Chile and Xynthia, ultimate losses include the Chilean, Haitian, and Baja earthquakes, Xynthiaand the Australian hailstorms. Based on international catastrophe losses being two-thirds of total catastrophe losses as disclosed in the earnings conference call. (5) Initial estimate is as of the first quarter conference call. Both initial and revised estimates reflect only the Chilean earthquake. (6) Pro forma; includes losses from Harbor Point and Max Capital prior to the merger. Expressed as a percentage of combined 12/31/09 equity prior to the special dividend. (1) (2) (1) (2) (3) (1)(4) (1) (2) (2)(5) (6) Chilean Earthquake / Windstorm Xynthia Ultimate Net Losses as a % of 12/31/09 Common Equity ($ in millions) Less exposed to swings in the cat market |
17 3 (1) (3) (2) Losses $256 $140 $276 $140 $135 $165 $287 $384 $171 $125 $148 $155 $113 $257 $50 (4) ____________________ Source: Company filings, as of 12/31/08. Losses are generally disclosed net of reinstatement premiums. (1) Results reflect Ike only. (2) Equity includes preferred, which subsequently converted to common. (3) Equity includes preferred, which subsequently converted to common. (3) TRH does not disclose specific losses but did lose "$169.7 million principally relating to Hurricane Ike." $170 $305 Revised Estimate Initial Estimate (2) Ike / Gustav Ultimate Net Losses as a % of 6/30/08 Common Equity ($ in millions) 3.4% 3.8% 3.0% 4.2% 5.2% 6.0% 6.4% 7.2% 5.2% 7.8% 3.7% 5.3% 6.7% 8.3% 10.1% 6.6% 8.0% 4.4% 4.3% 0.0% 0.6% 2.2% 3.0% 4.3% 0.3% 2.6% 0.7% 0.3% 0.8% 0.8% 1.8% 0.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 12.4% 11.0% 10.1% 8.9% 8.9% 8.4% 8.1% 8.1% 7.8% 7.2% 7.0% 6.3% 6.0% 5.0% 4.8% 4.6% 3.4% VR FSR RNR MRH IPCR PTP ACGL AXS PRE HP AHL ENH ORH TRH AWH RE MXGL Less exposed to swings in the cat market (cont’d) |
18 Florida wind 1 in 100 year event - $370 million net loss Industry loss - $104 billion California earthquake 1 in 250 year event - $398 million net loss Industry loss - $41 billion Europe wind 1 in 100 year event - $239 million net loss Industry loss - $17 billion PML’s In-force as of July 1, 2010 |
19 Highlights Insurance Focus on the higher risk classes that are less price sensitive Growth will be limited to select profitable opportunities Benefit from strong client relationships with high renewal retentions in the mid 80’s Reinsurance Diverse portfolio with high ratings positions us well Pull back where pricing softens Latin America Emerging market with significant natural organic growth Seasoned team with strong market relationships and profitable track record Lloyd’s/London Continue to recruit new teams to build out the diversity of the platform Recent additions in international casualty reinsurance and marine and personal accident US Specialty Market conditions getting more competitive Strong distribution relationships help to generate a flow of business Selectively underwrite new business Declining volume in more commodity classes Strategy to Navigate the Soft Cycle |
20 $149.6 $293.7 $282.6 $289.0 $313.7 $321.0 $245.9 $163.2 $108.0 $247.1 $184.1 $173.5 $243.2 $265.2 $154.0 $126.4 $56.6 $88.4 $59.8 $12.3 $41.9 $43.7 $7.0 $10.0 $9.4 $40.7 $225.4 $248.7 $419.7 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $543.0 $709.3 $648.6 $811.6 $597.6 $469.0 $682.9 $356.1 2003 2004 2005 2006 2007 2008 2009 H1 '10 Lloyd's -- -- -- -- -- NM 15.0% U.S. Specialty -- -- -- -- 274.7% 46.5% 9.0% Reinsurance (6.1%) (30.7%) 11.6% 27.1% 27.4% 2.6% (13.4%) Insurance -- -- 141.7% 13.4% 13.5% 25.7% (15.2%) Total (5.0%) (12.8%) 39.6% 38.1% 52.7% 38.2% (2.7%) ____________________ (1) Excludes non-traditional, which is composed of structured contracts that Max stopped writing in 2003. Short tail lines contributed to 83% of total growth over the 3 years to 2009 Strong Cycle Management Discipline Long Tail (GPW) Short Tail (GPW) ($ in millions) Non-Traditional Year over year growth: Year over year growth: Lloyd's -- -- -- -- -- NM 101.1% U.S. Specialty -- -- -- -- 386.2% 47.8% 35.4% Reinsurance (1) 21.8% 72.2% (8.3%) (28.7%) 6.1% 34.2% (20.6%) Insurance 50.7% 30.5% (2.3%) (7.9%) (2.2%) 3.9% (8.6%) Total 38.1% 46.6% (5.0%) (14.7%) 12.4% 26.1% (2.5%) $49.1 $134.1 $106.7 $94.0 $82.9 $34.3 $2.2 $166.4 $231.9 $226.0 $177.4 $139.6 $125.1 $180.5 $192.3 $117.8 $197.1 $134.5 $35.9 $79.1 $85.3 $1.9 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $192.3 $182.7 $159.4 $222.5 $307.3 $469.1 $648.4 $412.4 2003 2004 2005 2006 2007 2008 2009 H1 '10 |
21 Conservative Reserve Position with High % of IBNR 50% 44% 36% 34% 28% 24% 24% 56% 64% 66% 72% 76% 76% 76% 50% $278 $189 $1,471 $1,240 $279 $232 $1,987 $1,275 $0 $500 $1,000 $1,500 $2,000 $2,500 Q2 2010 Q4 2009 Q2 2010 Q4 2009 Q2 2010 Q4 2009 Q2 2010 Q4 2009 Case IBNR 24% Insurance Reinsurance Alterra at Lloyd's U.S. Specialty ($ in millions) ____________________ Note: Includes the results of Harbor Point from May 12, 2010, the closing date of the merger. |
22 43% 39% 27% 31% 29% 57% 61% 73% 69% 71% $3,773 $3,178 $2,938 $2,334 $2,335 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2006 2007 2008 2009 Q2 2010 Case Reserves IBNR Favorable Reserve Development $5.9 $45.1 $90.8 $77.2 $41.2 Development as a % of Net Reserves 0.3% 1.9% 3.0% 2.4% 1.1% Consistently Favorable Reserve Development Net Loss Reserves ($ in millions) ____________________ Note: Reserve development and net reserves prior to May 12, 2010 are for Max Capital only. |
23 High Quality Conservative Investment Portfolio Alterra maintains a high quality, liquid portfolio 94.4% of portfolio in fixed income/cash, which consists of highly rated securities Assets are generally matched to liabilities Cycle management extends to investments – current posture is defensive Cash balance reduced to $741.7 million or 9.6% of portfolio Current average fixed income duration of approximately 3.98 years including the impact of cash (4.41 without cash) 60.3% of the cash and fixed maturities portfolio is held in cash, government / agency-backed securities, or AAA securities 70.8% of fixed income portfolio rated AA or better Hedge fund investments are marked-to-market Minimal exposure to selected asset classes CMBS of $357.4 million (4.6% of portfolio) – average rating of AA+/Aa1 ABS of $98.3 million (1.3% of portfolio) RMBS of $1,115.6 million (14.4% of portfolio) – 91.2% agency- backed No CDO’s, CLO’s, SIV’s or other highly structured securities Fixed income portfolio has had meaningfully lower OTTI losses than peers Carrying Value $7.7 billion June 30, 2010 Fixed Income 84% Cash 10% Hedge Funds 6% |
24 0.25x 0.50x 0.75x 1.00x 1.25x 1.50x 1.75x 2.00x 8/27/00 10/6/01 11/16/02 12/27/03 2/5/05 3/17/06 4/27/07 6/6/08 7/17/09 8/27/10 Valuations Have Trended to a Historical Low Price to Trailing Book Value (10 Years) Average: 1.24x Peers: 0.79x Current valuations are at a 36% discount to the long term average Alterra: 0.74x Alterra trades at a 40% discount to the long term peer average |
25 We believe we can generate an average ROE of 13% to 15% across the cycle ____________________ Note: Primary price / book multiple as of 8/27/10. Alterra Offers a Compelling Story Well established operating platforms provide full access to business Diversified portfolio of business across casualty and property lines Specialty orientation with a balance of insurance vs. reinsurance Opportunistic approach – nimble and responsive to market trends Defensive, high quality investment portfolio Invested asset leverage will drive more consistent returns Balance sheet strength with low leverage / financial flexibility Attractive entry point – current price / book value of 0.74x |
26 Alterra means "high ground" — a place of security Alterra Capital Holdings Limited Bermuda Ireland United States Lloyd’s Latin America |
27 Appendices |
28 June 30, December 31, 2010 2009 Cash & Fixed Maturities 7,296 $ 4,944 $ Other Investments 437 315 Premium Receivables 780 567 Losses Recoverable 962 1,001 Other Assets 500 513 �� Total Assets 9,975 $ 7,341 $ Property & Casualty Losses 3,773 $ 3,178 $ Life & Annuity Benefits 1,209 1,373 Deposit Liabilities 148 153 Funds Withheld 120 140 Unearned Premium 1,090 628 Bank Loan 200 - Senior Notes 90 90 Other Liabilities 418 213 Total Liabilites 7,048 $ 5,775 $ Shareholders' Equity 2,927 1,565 9,975 $ 7,340 $ Strong Balance Sheet ($ in millions) (1) Results for the six months ended June 30, 2010 includes results from Harbor Point following the close of the merger on May 12, 2010. |
29 Half Year Results Comparison ($ in millions) Six months ended (1) Pro forma six months ended (2) June 30, June 30, June 30, June 30, 2010 2009 2010 2009 Gross Premiums Written 770 $ 831 $ 1,153 $ 1,227 $ Net Premiums Earned 488 419 706 684 Net Investment Income 102 82 126 119 Net Realized and Unrealized Gains (Losses) on Investments (8) 40 - 43 Other Than Temporary Impairment Charges (1) (2) (1) (2) Other Income - 2 1 3 Total Revenues 581 541 832 847 Total Losses, Expenses & Taxes 441 453 702 664 Net Income 140 $ 88 $ 130 $ 183 $ Net Operating Income 99 $ 95 $ Property & Casualty Underwriting Loss Ratio 58.6% 65.4% Expense Ratio 27.6% 24.9% Combined Ratio 86.2% 90.3% (1) Results for the six months ended June 30, 2010 include results from Harbor Point following the close of the merger on May 12, 2010. (2) Pro forma 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 on January 1, 2009. The pro forma information assumes the elimination of intercompany transactions and the amortization of certain acquisition accounting fair value adjustments. The pro forma information does not necessarily represent results that would have occurred if the amalgamation had taken place on January 1, 2009, nor is it necessarily indicative of the future results. |
30 Six months ended June 30, 2010 ($ in millions) Differences in table due to rounding. Includes results from Harbor Point following the close of the merger on May 12, 2010. (1) Property and Casualty only. Diversified Operating Platform Life & Property & Casualty Annuity Corporate Consolidated Alterra at Insurance Reinsurance U.S. Specialty Lloyd's Total Reinsurance Gross premiums written $198.7 $274.4 $174.4 $120.9 $768.5 $1.7 $0.0 $770.1 Reinsurance premiums ceded (84.8) (58.7) (56.1) (33.2) (232.8) (0.1) 0.0 (232.9) Net premiums written $113.9 $215.7 $118.3 $87.7 $535.7 $1.5 $0.0 $537.2 Earned premiums 196.9 270.5 149.9 77.7 695.1 1.7 0.0 696.7 Earned premiums ceded (90.9) (35.0) (68.6) (14.6) (209.1) (0.1) 0.0 (209.2) Net premiums earned $106.0 $235.5 $81.4 $63.2 $486.0 $1.5 $0.0 $487.5 Net investment income $12.4 $24.6 $2.7 $5.1 $44.8 $25.5 $31.4 $101.7 Net realized and unrealized gains (losses) on investments 0.2 0.2 0.0 (1.5) (1.0) 4.1 (11.4) (8.4) Net impairment losses recognized in earnings 0.0 0.0 0.0 0.0 0.0 0.0 (0.7) (0.7) Other income 0.0 0.2 0.1 0.4 0.6 0.0 0.1 0.6 Total revenues $118.6 $260.4 $84.1 $67.1 $530.3 $31.1 $19.4 $580.7 Net losses and loss expenses $73.2 $132.5 $50.4 $28.7 $284.8 $0.0 $0.0 $284.8 Claims and policy benefits 0.0 0.0 0.0 0.0 0.0 31.6 0.0 31.6 Acquisition costs 0.5 47.6 12.8 11.8 72.8 0.3 0.0 73.0 Interest expense 0.5 5.1 0.0 0.0 5.5 4.0 3.3 12.9 Net foreign exchange losses 0.0 0.5 0.0 (3.9) (3.4) 0.0 0.3 (3.1) Merger and acquisition expenses 0.0 0.0 0.0 0.0 0.0 0.0 (49.8) (49.8) General and administrative expenses 12.4 23.8 16.5 8.5 61.2 1.3 24.7 87.2 Total losses and expenses 86.6 209.5 79.7 45.1 420.9 37.2 (21.5) 436.5 Income before taxes $32.0 $51.0 $4.4 $22.0 $109.4 ($6.1) $40.9 $144.2 Loss ratio 69.1% 56.3% 62.0% 45.4% 58.6% Acquisition cost ratio 0.5% 20.2% 15.7% 18.7% 15.0% General and administrative expense ratio 11.6% 10.1% 20.2% 13.5% 12.6% Combined ratio (1) 81.2% 86.6% 97.9% 77.6% 86.2% |
31 Shareholders’ Equity ($ 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 Historic Harbor Point – Financial Highlights |
32 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 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 $800 2006 2007 2008 2009 Historic Harbor Point – Financial Highlights (Cont’d) |
33 Premiums Written ($ 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 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 Historic Max – Financial Highlights |
34 14.7% (10.0%) 20.7% 17.3% 1.0% 15.8% (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 2004 2005 2006 2007 2008 2009 88% 92% 88% 86% 106% 94% 0% 20% 40% 60% 80% 100% 120% 2004 2005 2006 2007 2008 2009 $3.62 ($2.54) $4.81 $3.52 $0.19 $2.70 ($4.00) ($2.00) $0.00 $2.00 $4.00 $6.00 2004 2005 2006 2007 2008 2009 Gross Premiums Written ($ in millions) P&C Combined Ratio Operating Diluted EPS(1) Operating ROE (1) Excludes merger and acquisition related revenue and expenses. $44 $242 $302 $45 $275 $212 $0 $300 $600 $900 $1,200 $1,500 Life P&C $1,044 $1,246 $865 $1,078 $1,254 $1,375 2004 2005 2006 2007 2008 2009 Historic Max Results |
35 $1,565 $1,280 $1,584 $1,390 $1,186 $903 $28.01 $22.94 $27.54 $23.06 $20.16 $19.70 $0 $300 $600 $900 $1,200 $1,500 $1,800 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 Shareholders' Equity Book Value per Share 2004 2005 2006 2007 2008 2009 $0.38 $0.36 $0.32 $0.24 $0.18 $0.12 $0.00 $0.10 $0.20 $0.30 $0.40 2004 2005 2006 2007 2008 2009 Investment Leverage Shareholders' Equity Book Value per Share Invested Assets ($ in millions) Shareholders Equity and BVPS ($ in millions) Operating Cash Flow ($ in millions) Dividends $5,259 $3,515 $4,228 $4,536 $5,123 $5,357 3.4x 3.9x 3.6x 3.3x 3.2x 4.2x $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x Invested Assets Leverage 2004 2005 2006 2007 2008 2009 $193 $482 $228 $405 $442 $799 $0 $200 $400 $600 $800 $1,000 2004 2005 2006 2007 2008 2009 Historic Max Results (cont’d) |