A.M. Best Comments That Ratings Are Unchanged for Alterra Capital Holdings Ltd. and Its Operating Subsidiaries

  A.M. Best Comments That Ratings Are Unchanged for Alterra Capital Holdings
  Ltd. and Its Operating Subsidiaries

Business Wire

OLDWICK, N.J. -- December 19, 2012

A.M. Best Co. has commented that the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (ICR) of “a” of Alterra Bermuda Limited
(Alterra Bermuda) and its affiliated operating companies are unchanged based
on the proposed transaction between Alterra Capital Holdings Ltd. (Alterra)
[NASDAQ: ALTE] and Markel Corporation (Virginia) [NYSE: MKL]. Concurrently,
A.M. Best has commented that the ICR of “bbb” of Alterra is unchanged as well
and the debt ratings of Alterra, Alterra USA Holdings Limited, Alterra
Finance, LLC (both domiciled in Delaware) and Alterra Capital Trust I. The
outlook for all ratings is stable. The above named companies are domiciled in
Bermuda, unless otherwise specified. (See below for a detailed listing of the
companies and ratings.)

The ratings reflect the organization’s historical solid financial performance
and strong risk-adjusted capitalization. Post-merger, Alterra will be part of
a larger organization with more scale and reach while remaining a specialty
underwriter. Risk-adjusted capitalization is expected to remain strong. The
closing is expected to take place in the second quarter of 2013, subject to
regulatory approval and customary closing conditions.

Rating factors that could lead to a downgrading of Alterra’s ratings or a
revision in the outlook to negative include unfavorable operating
profitability trends, outsized catastrophe or investment losses relative to
peers, significant adverse loss reserve development, a material decline in
risk-adjusted capital and/or an unsuccessful execution of the transaction,
which could damage the Alterra franchise. Alternatively, factors that could
lead to an upgrading of the ratings include continued favorable operating
profitability coupled with maintenance of strong risk-adjusted capital levels
and/or additional support from the new parent organization.

The FSR of A (Excellent) and ICRs of “a” are unchanged for Alterra Bermuda
Limited and  its following operating affiliates:

  *Alterra Europe plc
  *Alterra America Insurance Company
  *Alterra Excess and Surplus Insurance Company
  *Alterra Reinsurance USA Inc.

The following debt ratings are unchanged:

Alterra USA Holdings Limited (guaranteed by Alterra Capital Holdings Limited)—

--“bbb” on $100 million 7.2% senior secured notes, due 2017

Alterra Finance, LLC (guaranteed by Alterra Capital Holdings Limited)—

--“bbb” on $350 million 6.25% senior unsecured notes, due 2020

The following indicative ratings under the current shelf registration are

Alterra Capital Holdings Limited—

--“bbb” on senior unsecured debt

--“bbb-” on subordinated debt

--“bb+” on preferred stock

Alterra USA Holdings Limited (guaranteed by Alterra Capital Holdings Limited)—

--“bbb” on senior secured debt

--“bbb-” on subordinated debt

Alterra Capital Trust I (guaranteed by Alterra Capital Holdings Limited)—

--“bb+” on preferred securities

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Greg Reisner
Managing Senior Financial Analyst
(908) 439-2200, ext. 5224
Robert DeRose
Vice President
(908) 439-2200, ext. 5453
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
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