Bermuda-based Alterra Capital Holdings Ltd has agreed to merge with US specialty insurer Markel Corp in a deal worth more than $3 billion.Alterra CEO Marty Becker, a veteran of the Bermuda insurance market, is expected to leave the combined company after the merger.Both companies expect the deal to close in the first quarter of next year.After the transaction, Markel, based in Glen Allen, Virginia, is expected to write annual gross premiums of approximately $4.4 billion and to have approximately $6 billion in equity with capital flexibility to support future growth.A joint statement released this morning said the merger would “bring together seasoned and accomplished underwriting teams with limited overlap in diverse specialty insurance and reinsurance lines”.Plans for the future of Alterra's Bermuda-based operations are not made clear in the statement.The company, founded in 2010 as the result of the merger between Max Capital and Harbor Point Re, employed around 120 people in Bermuda at the time of that merger."The combination of Alterra with Markel will create an incredibly strong company in global specialty insurance and investments,” Mr Becker said.“The demonstrated track record of underwriting discipline in niche market segments by both companies, along with Markel's proven asset management strengths, should benefit all stakeholders.“I am confident that Alterra's shareholders, clients and other business partners will continue to be well served when Alterra's underwriting operations join forces with Markel's, and all should benefit from the superior financial strength, expanded capabilities and synergies created by the combined entity."The details of the deal are that at closing, each Alterra common share will be converted into the right to receive 0.04315 Markel common shares (with cash paid for fractional shares) plus a cash payment of $10.Following the merger, Markel's existing shareholders will own approximately 69 percent of the combined company on a fully diluted basis, with Alterra's shareholders owning approximately 31 percent. Completion of the transaction is contingent upon customary closing conditions.Steven Markel, vice-chairman of Markel, said: "We are very pleased to have reached this agreement to acquire Alterra, an impressive company with proven worldwide underwriting operations in product lines that we believe are highly complementary to Markel's existing lines.“In particular, the addition of Alterra's reinsurance and large account insurance portfolios will serve to diversify and strengthen Markel's current book of specialty insurance business.“We look forward to welcoming Alterra's talented underwriting teams to Markel - with their help and the benefit of approximately $6 billion in combined shareholders' equity, we believe we will be well positioned to take advantage of a wide range of profitable opportunities."