Alterra US Insurance – Alterra Specialty September 2012 Exhibit 99.1 |
Cautionary Note Regarding Forward-Looking Statements 2 This presentation may include forward-looking statements that reflect Alterra Capital Holdings Limited’s and its subsidiaries (collectively “Alterra”) 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. 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 effect of cyclical trends, including with respect to demand and pricing in the insurance and reinsurance markets; (4) changes in general economic conditions, including changes in capital and credit markets; (5) any lowering or loss of financial ratings; (6) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding expectations; (7) actions by competitors, including consolidation; (8) the effects of emerging claims and coverage issues; (9) the loss of business provided to Alterra by its major brokers; (10) the effect on Alterra’s investment portfolio of changing financial marketing conditions including inflation, interest rates, liquidity and other factors; (11) tax and regulatory changes and conditions; (12) retention of key personnel; (13) the integration of new business ventures Alterra may enter into; and (14) 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 reports on Form 10-K and Form 10-Q 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. Alterra US Insurance is Alterra’s U.S. Insurance segment. The name Alterra Specialty is used throughout this presentation as the trade name to refer to Alterra US Insurance’s specialty insurance operations. |
Alterra US Insurance contributes to Alterra Capital’s diversified niche orientation by adding profitable business in both property and casualty throughout the market cycle |
Executive Previous Experience Years Experience Doug Worman EVP – Alterra Capital Holdings Ltd President & CEO – Alterra US Insurance Managing Director – Sharebridge Holdings President & CEO Sharebridge Underwriting Group President & CEO – AIG Excess Casualty Group 21 Bryan Sanders CEO – Alterra Specialty COO – Alterra Specialty President – E&S Division, HRH President Dominion Specialty 30 Jon Hahn EVP – Brokerage Division Alterra Specialty VP Western Region Markel Corporation 20 Mike Miller SVP & CUO – Marine Division Alterra Specialty CUO Specialty Division Firemans Fund William H McGee 39 Phil Vedell SVP, CAO, Director of Catastrophe Management SVP Aon 17 Joe Rainone SVP – Excess Casualty Division Alterra Specialty SVP RSUI 34 Dan Gamble EVP – Executive & Professional Liability Group Alterra US Insurance Managing Director – Alterra USA EVP – Executive Assurance Arch Insurance Group 18 Jim Tait CFO – Alterra US Insurance EVP – Alterra Capital Services Chairman & CFO – Vesta Insurance Group Chairman – Tait Advisory Services 38 4 Executive Team 4 |
Nationwide excess and surplus lines writer of property, casualty and marine Start up operation for Alterra Three distinct divisions: Brokerage, Marine and Excess Casualty Six strategically placed offices throughout the US Significant product diversification, strong distribution relationships and technical expertise Offering Excess, Buffer, and Primary Property; Specialty Homeowners; Inland and Ocean Marine; Excess Casualty & Professional Liability Admitted Company – Alterra America – Admitted in all 50 states Eligible Company – Alterra E&S – Eligible in 49 states on a surplus lines basis Alterra Specialty – Leading E&S Writer 5 |
$330.2M of GPW in 2011, up from $294.5M in 2010 Growth came from both existing and new teams The 2011 reported combined ratio of 104.8% included unfavorable reserve development related to CBA business we no longer write 70% short tail, 30% long tail Profitability improving as developing business matures Historically utilized third party reinsurance to minimize exposure Programs adjusted as business matures and profitability trends become known Proactive management and control of property catastrophe exposures Our product mix changed in 2011... 6 |
Conditions improving in 2012, well positioned for harder market Will remain selective and continue to book conservatively Strong distribution relationships generate good flow and allow us to be selective Market conditions are competitive Core property business remains profitable Measured building of our casualty platforms Exited product lines and shrunk less profitable product lines and classifications Market dislocations provide the opportunity to add new teams and products Expanding select product lines offered to producer base Reputation of being problem solvers with strong underwriting expertise Concentrate on the ‘middle market’, not Fortune 500 accounts Still conservative in a slightly improved market 7 |
Specialty Product Mix – by GPW ($ in thousands) 8 GPW 2Q 2012 PL 8,961 5% Excess 22,169 12% Property (incl. Homeowners) 75,517 41% Marine 53,836 30% GL (Discontinued) 2,401 1% CBA (Discontinued – excludes Selective) 1,455 1% Selective 18,709 10% TOTAL 183,048 GPW 2Q 2011 PL 9,249 5% Excess 0 0% Property (incl. Homeowners) 74,254 44% Marine 42,498 25% GL 9,095 5% CBA 34,740 21% Selective 0 0% TOTAL 169,836 5% 12% 41% 30% 1% 1% 10% GPW 2Q 2012 PL Excess Property Marine GL CBA Selective 5% 0% 44% 25% 5% 21% 0% GPW 2Q 2011 PL Excess Property Marine GL CBA Selective |
Underwriting/ Products 2011 GPW of $110.6M H1 2012 GPW written of $69.5M $25M of per risk capacity, average policy is limit $7M Average premium of approximately $45,000 per policy Both property cat and non-cat exposed layer accounts Middle market P&C Target markets include: apartments, offices, mixed use, hotels, shopping centers Proactive management of catastrophe exposures in real time Fully implemented new RMS Model v11.0; optimized current portfolio PMLs leading to a reduction in PMLs Market Conditions Pricing for H1 2012 was up across the property portfolio. Higher rate increases were available for wind exposed business in FL, TX and the Gulf Coast. The post 6/30 rate environment has tempered. Competition from standard markets has mitigated with some business flowing back to the E&S arena Submissions remains active Renewal retentions are within expectations Brokerage Property 9 |
Underwriting/ Products 2011 GPW with $88.5M H1 2012 GPW of $53.8M Approved to write on a non-admitted basis in 49 states and on admitted basis in all 50 states $25M of per risk capacity, average policy limit < $5M Regional offices in Atlanta, Chicago, Dallas, New York, Philadelphia and San Francisco Estimated size of the Commercial Inland/Ocean Marine Market > $12B Target Market for Inland includes: Construction, Transportation & Logistics, Communications & Technology, Dealers, Specialty Inland Marine Target Market for Ocean includes: Importers/Exporters, Manufacturers, Distributors Market Conditions Market has stabilized; rate environment is spotty, increases are obtainable on accounts with “Critical Cat” exposures and risks with a loss history Overall environment remains competitive because of the excess capacity that exists The lack of a significant event over the next couple of months will put pressure on the rates again Three established markets have placed an emphasis on substantially growing their Marine book in 2013 – XL, One Beacon and Zurich Marine 10 |
Underwriting/ Products Start up operation July 1, 2011 GPW as of June 30, 2012 is $26.2M Write both lead and excess layer business; split is 55/45 as of June 30, 2012 $25M Q/S Treaty ~ 60% ceded as of June 30, 2012 53% of accounts have limits of $5M or less, 78% are $10M or less Majority of exposures are shorter tail, premises oriented exposures Write most classes of business ~ 55% are in the contracting/service classes Market Conditions General marketplace continues to be competitive We’re seeing very heavy submission activity, which allows us to be selective. Some Excess carriers are reducing limits, which thereby creates new opportunities We’re also relying on strong, long term broker relationships Excess Casualty 11 |
Underwriting/ Products H1 2012 GPW written of $24.5M as of June 30, 2012 Risk selection is the key driver of all decision-making and execution of all initiatives Expanded distribution to complement our PL/D&O writings in Bermuda Focus on excess D&O for commercial and financial institution accounts We write Professional Liability for MPL, A&E and LPL through two distinct distribution channels (small wholesale in Richmond and retail/larger wholesale in NY) D&O average limit $10M PL average limits < $5M Market Conditions Primary markets are beginning to push rate and retention Market conditions remain competitive but are improving marginally Continued marketing and branding efforts have led to an uptick in better submissions We actively continue to recruit top underwriting talent in accordance with our business plan Professional Liability 12 |