NEW YORK (Bloomberg) — Marston Becker, chief executive officer of Bermuda-based Alterra Capital Holdings Ltd., said reinsurers are pushed to consider mergers and acquisitions by clients and investors, who prefer carriers with larger capital bases.

"There are some real reasons why more M&A would be beneficial in our space today," Becker said in an interview at Bloomberg headquarters in New York. "You've got to be of a certain size to be a player in the business and to be an acceptable counterparty risk."

Becker doubled the shareholders' equity he oversees this month by merging Max Capital Group Ltd., which he previously led, and Bermuda-based reinsurance rival Harbor Point Ltd.

The new firm, Alterra, will have about $3 billion of equity after paying more than $300 million in a special dividend. That's enough to reassure clients that claims will be paid, and enough to entice new investors should the need arise, Becker said.

Billionaire investor Wilbur Ross said in March 2009 he was considering buying and combining reinsurers, citing "an awful lot" of companies with equity of between $1 billion and $2 billion. Berkshire Hathaway Inc.'s Franklin Montross said in a conference in October that mergers and acquisitions in the industry may occur in Bermuda, where many of the carriers are "quite small."

"Ten plus years ago, $100 million was a big reinsurer," Becker said. "Then it became $500 million, then it became a billion. And today to be a credible, diversified reinsurer, what's the number? Is it $2 billion, is it $2.5 billion, is it $3 billion? It's somewhere in that range."

Nine carriers tracked by the Association of Bermuda Insurers and Reinsurers ended last year with equity of less than $2 billion, according to data from the group. That includes Max and Harbor Point. Ace Ltd., the biggest of the 23 companies in the group, had equity of $19.7 billion, the association said.

Insurers are turning to mergers and acquisitions to expand after six years of falling prices for US commercial coverage left fewer opportunities to write business profitably.

"There continues to be a lot of chatter about M&A especially in Bermuda," said Kevin Lee, an analyst who covers reinsurers for Moody's Investors Service. "There is over- capacity in this industry and M&A is one way for capital to leave the industry."

John Berger, who was CEO of Harbor Point and now heads Alterra's reinsurance business, said in an interview that low rates would have limited his firm to writing just $600 million of business this year. Harbor Point's end-of-December equity was about $1.9 billion.