Alterra Capital Reports Q2 2010 Results

Hamilton, Bermuda – 04 August, 2010 - Alterra Capital Holdings Limited (NASDAQ: ALTE; BSX: ALTE.BH) announced net income of $103.4 million, or $1.13 per diluted share, for the second quarter of 2010, compared to net income of $43.8 million, or $0.76 per diluted share, for the same quarter of 2009. Alterra was formerly known as Max Capital Group Ltd. ("Max") and was formed on May 12, 2010 by the merger of Max and Harbor Point Limited, a privately held company ("Harbor Point").

Net operating income for the second quarter of 2010 was $58.8 million, or $0.64 per diluted share, compared to net operating income of $47.8 million, or $0.83 per diluted share, for the same quarter of 2009. Annualized net operating return on average shareholders' equity for the second quarter of 2010 was 10.1%.

For the six months ended June 30, 2010, Alterra reported net income of $139.8 million, or $1.88 per diluted share, compared to net income of $88.3 million, or $1.54 per diluted share, for the same period of 2009. Net operating income for the six months ended June 30, 2010 was $99.5 million, or $1.33 per diluted share, compared to net operating income of $94.7 million, or $1.65 per diluted share, for the same period of 2009. Annualized net operating return on average shareholders' equity for the six months ended June 30, 2010 was 10.2%.

The results for Alterra include the results for the former Harbor Point companies from the date of the consummation of the merger on May 12, 2010. Comparative figures for 2009 represent the former Max results only. As a result, a comparison of current and prior periods for the reinsurance segment are not meaningful. Selected pro forma combined results for periods prior to the merger are provided in the second quarter financial supplement available on Alterra's website.

W. Marston (Marty) Becker, President and Chief Executive Officer of Alterra, said: "This quarter represents the first quarter of results for Alterra, the product of the merger of Max and Harbor Point. We firmly believe the merger has created a stronger, more flexible organization that will provide enhanced value to our clients and shareholders.

"During the quarter, two significant events followed on from the merger. First, Alterra received a financial strength rating of "A (Excellent)" from A.M. Best Co., and second, Alterra made a special dividend distribution to all shareholders of $2.50 per common share. We regard each of these events as a positive indicator of Alterra's strong capital position and responsible capital management.

"This was a transitional quarter for Alterra, as it does not reflect a full quarter's results for the former Harbor Point companies.  Another quarter will be needed before our income fully reflects the earnings power of our combined operations. However, we have already begun to enjoy the benefits of the merger as evidenced by the increase in the contribution of the reinsurance segment to our business mix.

"Generally soft market conditions continue to present a challenge to insurers and reinsurers, Alterra included. We have managed our premium volumes with the long term in mind, scaling back in areas with softer pricing. The larger, more diversified Alterra has the balance and flexibility to efficiently allocate capital and resources to expand or retract as conditions warrant," Mr. Becker added.

Second quarter 2010 results for Alterra include:

• Property and casualty gross premiums written of $398.2 million, representing an increase of $42.7 million, or 12.0%; net premiums written of $318.5 million, representing an increase of $92.7 million, or 41.0%; and net premiums earned of $292.5 million, representing an increase of $104.7 million, or 55.8%; each as compared to the same quarter of 2009;
• Property and casualty combined ratio of 83.3% compared to 90.8% in the same quarter of 2009;
• Property catastrophe event and significant per-risk net losses of $20.3 million compared to $5.5 million in net losses of a similar nature in the same quarter of 2009;
• Net favorable development on prior years' loss reserves of $24.1 million, or 8.3 combined ratio points, compared to $20.0 million, or 10.7 combined ratio points, in the same quarter of 2009;
• Net investment income of $53.3 million compared to $41.8 million in the same quarter of 2009, an increase of 27.6%;
• Net operating income of $58.8 million, or $0.64 per diluted share, representing an annualized net operating return on average shareholders' equity of 10.1%; and
• A negative goodwill gain of $95.8 million, partly offset by merger and acquisition costs of $41.2 million.

Gross premiums written from property and casualty underwriting for the second quarter of 2010 were $398.2 million, generated by the segments as follows: insurance - $132.3 million; reinsurance - $119.6 million; U.S. specialty - $97.5 million; and Alterra at Lloyd's - $48.8 million. Included in the reinsurance segment gross premiums written were $40.8 million from the former Harbor Point companies representing their gross premiums written from the date of the consummation of the merger on May 12, 2010.

Segment combined ratios for the second quarter of 2010 were 76.9% for insurance, 83.5% for reinsurance, 97.3% for U.S. specialty and 73.2% for Alterra at Lloyd's.

Gross premiums written for the second quarter of 2010 decreased by $1.6 million, or (1.2)%, for insurance and increased by $24.4 million, or 25.6%, for reinsurance compared with the same quarter of 2009. Gross premiums written increased by $16.5 million, or 20.3%, for U.S. specialty, and by $3.4 million, or 7.6%, for Alterra at Lloyd's. There were no new contracts written within the life and annuity segment during the second quarter of 2010. Due to the lack of profitable business opportunities and low investment yields in the current investment environment, Alterra has not identified any life and annuity transactions that have met its return hurdles. Consequently, Alterra has determined not to write any new life and annuity reinsurance in the foreseeable future.

Results for the six months ended June 30, 2010 include:

• Property and casualty gross premiums written of $768.5 million, representing a decrease of $20.7 million, or (2.6)%; net premiums written of $535.7 million, representing an increase of $40.4 million, or 8.2%; and net premiums earned of $486.0 million, representing an increase of $108.4 million, or 28.7%; each as compared to the same period of 2009;
• Property and casualty combined ratio of 86.2% compared to 90.3% in the same period of 2009;
• Property catastrophe event and significant per-risk losses of $29.9 million compared to $8.9 million in the same period of 2009;
• Net favorable development on prior years' loss reserves of $41.2 million, or 8.5 combined ratio points, compared to $32.3 million, or 8.6 combined ratio points, in the same period of 2009;
• Net investment income of $101.7 million compared to $82.2 million in the same period of 2009, an increase of 23.6%; and
• Net operating income of $99.5 million, or $1.33 per diluted share, representing an annualized net operating return on average shareholders' equity of 10.2%.

Gross premiums written from property and casualty underwriting for the six months ended June 30, 2010 were $768.5 million, generated by the segments as follows: insurance - $198.7 million; reinsurance - $274.4 million; U.S. specialty - $174.4 million; and Alterra at Lloyd's - $120.9 million.

Segment combined ratios for the six months ended June 30, 2010 were 81.2% for insurance, 86.6% for reinsurance, 97.9% for U.S. specialty and 77.6% for Alterra at Lloyd's.

Gross premiums written for the six months ended June 30, 2010 decreased by $22.9 million, or (10.3)%, for insurance and by $53.7 million, or (16.4)%, for reinsurance compared with the same period of 2009. Gross premiums written increased by $24.5 million, or 16.4%, for U.S. specialty and by $31.4 million, or 35.0%, for Alterra at Lloyd's. There were no new contracts written within the life and annuity segment during the six months ended June 30, 2010.

Balance Sheet

Alterra's balance sheet at June 30, 2010 comprises the combined assets and liabilities of Max and Harbor Point. Total invested assets, including cash and cash equivalents, were $7.7 billion at June 30, 2010, an increase of $2.5 billion from December 31, 2009. The credit quality of Alterra's fixed maturities investment portfolio remains high. At June 30, 2010, 96.6% of the fixed maturities portfolio (by carrying value) was investment-grade, compared to 96.6% at December 31, 2009. Alterra recognized other-than-temporary impairment losses through earnings of $0.3 million for the second quarter of 2010, compared to $2.0 million of impairment losses during the same quarter of 2009. As of June 30, 2010, the weighted average book yield of Alterra's cash and fixed maturities portfolio was 3.33% and the weighted average duration was 4.0 years.

Net investment income for the second quarter of 2010 increased to $53.3 million from $41.8 million for the same quarter of 2009, and to $101.7 million from $82.2 million for the six months ended June 30, 2010 and 2009, respectively. The increase in net investment income reflects the additional investment income from the Harbor Point investment portfolio from the consummation of the merger on May 12, 2010, and an increased allocation to higher-yielding fixed maturity securities.

On June 16, 2010, Alterra paid a special dividend of $2.50 per share to shareholders of record as of June 2, 2010. Under the Board-approved share repurchase authorization, Alterra commenced repurchases under a 10b-5 share repurchase program on June 28, 2010, purchasing 109,000 shares during the second quarter of 2010 at an average price of $18.87 per share. Separately, Alterra repurchased 1,482,674 of its common shares on June 30, 2010 at a price of $19.00 per share for a total purchase price of $28.2 million. At June 30, 2010, $91.1 million remained under the Board-approved share repurchase authorization.

Shareholders' equity was $2,927.0 million at June 30, 2010, an increase of 87.1% from December 31, 2009. Book value per diluted share at June 30, 2010 was $24.55 compared to $27.36 at December 31, 2009, a decrease of 10.3%, principally due to the payment of a $2.50 per share special dividend paid shortly after the consummation of the merger and the impact of acquisition accounting adjustments.

A copy of Alterra's financial supplement for the second quarter will be available on Alterra's website at www.alterracap.com shortly after the release of earnings.

Alterra Capital Holdings Limited is a global enterprise dedicated to providing diversified specialty insurance and reinsurance products to corporations, public entities, property and casualty insurers, and life and health insurers. Alterra was formed on May 12, 2010 by the merger of Max Capital Group Ltd. and Harbor Point Limited.

Contacts

Susan Spivak Bernstein

Senior Vice President

 susan.spivak@alterra-bm.com          1-212-898-6640

Roanne Kulakoff or Peter Hill

Kekst and Company

roanne-kulakoff@kekst.com

peter-hill@kekst.com

1-212-521-4800