Alterra Capital Holdings Ltd. topped $100 million in profit in its first quarterly earnings report since the company was formed by the merger of Max Capital Group and Harbor Point Re.

The Bermuda-based insurer and reinsurer last night reported net income of $103.4 million, or $1.13 per diluted share, for the April through June period, compared to Max's net income of $43.8 million, or 76 cents per share in the same period last year. But Alterra chief executive officer Marty Becker said the numbers did not include a full quarter for the former Harbor Point companies — as the merger was completed on May 12, almost half way through the period — and that the full earning power of the new organisation would become clearer in the next quarter.

Net operating income for the second quarter of 2010 was $58.8 million, or 64 cents per diluted share, compared to net operating income of $47.8 million, or 83 cents per share, for the same quarter of 2009.

"During the quarter, two significant events followed on from the merger," Alterra chief executive officer Marty Becker said.

"First, Alterra received a financial strength rating of A (excellent) from AM 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."

Annualised net operating return on average shareholders' equity for the second quarter of 2010 was 10.1 percent. For the six months ended June 30, 2010, Alterra reported net income of $139.8 million, or $1.88 per diluted share, compared to $88.3 million, or $1.54 per diluted share, for the same period of 2009.

Net investment income for the second quarter of 2010 increased to $53.3 million from $41.8 million for the same quarter of 2009, benefiting from the addition of the Harbor Point portfolio from May 12.

Annualised net operating return on average shareholders' equity for the six months ended June 30, 2010 was 10.2 percent.

Shareholders' equity was $2.93 billion at June 30, 2010, an increase of 87.1 percent from December 31, 2009. Book value per share at June 30, 2010 was $24.55, compared to $27.36 at the end of last year, a decrease of 10.3 percent, principally due to the payment of a $2.50 per share special dividend paid shortly after the merger deal closed.

Alterra repurchased109,000 shares during the second quarter at an average price of $18.87 per share. Separately, Alterra repurchased 1,482,674 of shares on June 30, 2010 at a price of $19 per share for a total purchase price of $28.2 million.

ALTERRA Q2 REPORT CARD

Net income: $103.4 million compared to $43.8 million in 2009.

Gross premiums written: $399 million compared to $396.5 million last year.

Combined ratio: 83.3 percent compared to 90.8 percent in 2009.