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Alterra Capital profits sink on catastrophe losses


HAMILTON, Bermuda—Alterra Capital Holdings Ltd.'s net income sank 84.6% to $34.3 million during the first nine months of the year compared with the same period of 2010, reflecting this year's unusually high catastrophe losses, the Bermuda-based reinsurer announced Tuesday.

The Hamilton, Bermuda-based reinsurer said its gross written premiums rose 44.1% year over year to $1.58 billion during the nine months ended Sept. 30. The increase reflects Alterra's purchase of rival Harbor Point Ltd. in May 2010.

Property catastrophe losses surged 374.3% year over year to $208.7 million in the first three quarters, reflecting the impact of catastrophes ranging from the earthquake and tsunami in Japan to Hurricane Irene, the company said.

Net investment income increased 10.2% to $177.8 million during the first nine months of 2011 compared with the prior-year period. This included a $25 million loss on a catastrophe bond that had risk exposure to the March 11 disaster in Japan.

In the third quarter, Alterra's gross written premiums climbed 18.8% over the third quarter of 2010 to $386.3 million. Property catastrophe losses were $42.8 million in the third quarter, up 203.5% from the same period in 2010. Net investment income increased 1.0% to $60.3 million in the quarter.

“Earnings are down compared to the prior year, pressured by higher catastrophe losses and lower investment yields,” Alterra President and CEO Marty Becker said in a statement. “However, we remain pleased with the consistency of our underwriting results in the face of a very challenging year for property catastrophe business.”

As the Atlantic hurricane season nears its end and the January renewal season approaches, Mr. Becker said the company will have the “flexibility to take advantage of what appear to be more favorable market opportunities.”