Fitch Affirms Alterra's IFS Ratings Following Announced Acquisition by Markel

  Fitch Affirms Alterra's IFS Ratings Following Announced Acquisition by
  Markel

Business Wire

CHICAGO -- December 19, 2012

Fitch Ratings has affirmed the 'A' Insurer Financial Strength (IFS) ratings of
Alterra Capital Holdings Limited's (Alterra) insurance subsidiaries. The
Rating Outlook is Stable. Additionally, Fitch has placed on Rating Watch
Negative Alterra's 'A-' Issuer Default Ratings (IDR) and 'BBB+' senior debt
ratings. A full list of ratings follows at the end of this release.

Fitch's rating action follows today's announcement that Markel Corporation
(Markel) intends to acquire Alterra, with the transaction expected to close in
the first half of 2013. The affirmation and Stable Outlook on Alterra's 'A'
IFS ratings reflects that they are rated the same as Markel's IFS ratings and
would likely be affirmed at this level upon closing of the merger. The
affirmation also reflects Alterra's solid capitalization, sizable underwriting
platform, strong earnings track record, and disciplined and flexible approach
to managing risk.

The Rating Watch Negative on Alterra's IDR and debt ratings reflects that upon
the closing of the pending acquisition, Fitch will align Alterra's debt
ratings with those of Markel under a consolidated U.S. entity approach. This
will result in a one-notch downgrade to Alterra's IDR and debt ratings based
on Fitch's notching guidelines for a U.S. regulatory environment.

Alterra announced an initial net loss estimate from Hurricane Sandy in the
range of $90 million to $120 million pre-tax.

Fitch considers this level to be manageable given the company's solid
capitalization, although the loss estimate is still subject to significant
uncertainty.

Alterra's profitability improved through the first nine months of 2012
primarily due to lower catastrophe losses which totaled net $15 million vs.
$198 million for the first nine months of 2011. As a result, Alterra reported
net income of $196 million and a combined ratio of 92.9% at Sept. 30, 2012 vs.
net income of $34 million and a combined ratio of 98.4% for the same
nine-month period in 2011.

Alterra's reported underwriting profit and positive net income in 2011, a year
of record-high industry catastrophe losses, was notable among peers with
significant reinsurance operations, and is attributable in part to the
company's balanced product mix (reinsurance 57%, insurance 43% of gross
premium written (GPW)) with less property exposure (35% of 2011 GPW) than many
peers.

Fitch has affirmed the following ratings with a Stable Outlook:

Alterra Bermuda Limited

Alterra Europe plc

Alterra Reinsurance USA Inc.

Alterra Excess & Surplus Insurance Company

Alterra America Insurance Company

--IFS at 'A'.

Fitch has placed the following ratings on Rating Watch Negative:

Alterra Capital Holdings Limited

--IDR at 'A-'.

Alterra Finance LLC

--IDR at 'A-';

--$350 million 6.25% senior notes due Sept. 30, 2020 at 'BBB+'.

Alterra USA Holdings Limited

--IDR at 'A-';

--$90.6 million 7.2% notes due April 14, 2017 at 'BBB+'.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Hurricane Sandy: Sensitivity Analysis of Insured Loss Scenarios Special
Report' (Nov. 8, 2012);

--'Reinsurers Well Positioned to Withstand Hit from Sandy' Fitch Wire (Nov. 5,
2012);

--'Insurance Rating Methodology' (Oct. 18, 2012).

Applicable Criteria and Related Research:

Hurricane Sandy - Sensitivity Analysis of Insured Loss Scenarios

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=694791

Insurance Rating Methodology - Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=692293

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Primary Analyst
Gretchen Roetzer, +1-312-606-2327
Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Brian C. Schneider, CPA, CPCU, ARe, +1-312-606-2321
Senior Director
or
Committee Chairperson
Mark E. Rouck, CPA, CFA, +1-312-368-2085
Senior Director
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
Email: brian.bertsch@fitchratings.com