CASTLEPOINT HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)

Victoria Hall
11 Victoria Street
Hamilton HM 11
Bermuda
(441) 294-6409
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

CT Corporation System
111 Eighth Avenue, 13^th Floor
New York, New York 10011
(212) 590-9330
(Name and address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale of securities to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

We are offering of our common shares in this firm commitment underwritten public offering. In addition, the selling shareholders are offering of our common shares. We will not receive any of the proceeds from the sale of our common shares by the selling shareholders. This is our initial public offering. We anticipate that the initial public offering price of our common shares will be between $ and $ per share.

Prior to the offering pursuant to this prospectus, there has been no public market for our common shares, and our common shares are not currently listed on any national exchange or market system. We have applied to have our common shares approved for listing on the Nasdaq Global Market under the symbol "CPHL."

Investing in our shares involves risks. See "Risk Factors" beginning on page 16 of this prospectus to read about the risks you should consider before buying our shares.

We have granted the underwriters the right to purchase up to additional common shares at the public offering price, less the underwriting discounts, solely to cover over-allotments, if any. The underwriters can exercise this right at any time within 30 days after the date of our underwriting agreement with them.

None of the Securities and Exchange Commission (the "SEC"), any state securities regulators, the Registrar of Companies in Bermuda or the Bermuda Monetary Authority has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver our common shares to purchasers against payment on or about , 2007, subject to customary closing conditions.

		Page
PROSPECTUS SUMMARY		1
RISK FACTORS		16
A WARNING ABOUT FORWARD-LOOKING STATEMENTS		50
INSTITUTIONAL TRADING AND RELATED SHAREHOLDER MATTERS		51
USE OF PROCEEDS		51
DIVIDEND POLICY		52
CAPITALIZATION		53
DILUTION		54
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION		55
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		57
INDUSTRY BACKGROUND		84
BUSINESS		86
REGULATION		119
MANAGEMENT		131
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		149
PRINCIPAL SHAREHOLDERS		168
SELLING SHAREHOLDERS		170
DESCRIPTION OF SHARE CAPITAL		171
MATERIAL TAX CONSIDERATIONS		182
SHARES ELIGIBLE FOR FUTURE SALE		192
UNDERWRITING		194
LEGAL MATTERS		197
EXPERTS		197
ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. FEDERAL SECURITIES LAWS		197
WHERE YOU CAN FIND MORE INFORMATION		198
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1
GLOSSARY OF SELECTED REINSURANCE, INSURANCE AND INVESTMENT TERMS		G-1

The Bermuda Monetary Authority, to which we refer herein as the "BMA", must approve all issuances and transfers of securities of a Bermuda exempted company, such as CastlePoint Holdings, Ltd. Where any equity securities (that is, shares which entitle the holder to vote for or appoint one or more directors or securities which by their terms are convertible into shares which entitle the holder to vote for or appoint one or more directors) of a Bermuda company are listed on an appointed stock exchange (which includes the Nasdaq Global Market), the BMA has given general permission for the issue and subsequent transfer of any securities of the company from and/or to a non-resident for so long as any such equity securities of the company remain so listed. This prospectus will be filed with the Registrar of Companies in Bermuda in accordance with Bermuda law. In granting such general permission and in accepting this prospectus for filing, neither the BMA nor the Registrar of Companies in Bermuda accepts any responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus.

We have filed for registration in the U.S. Patent and Trademark Office for the marks "CastlePoint Holdings, Ltd.", "CastlePoint Reinsurance Company", "CastlePoint Insurance Company" and "CastlePoint Specialty Insurance Company". All other brand names or trade names appearing in this prospectus are the property of their respective holders.

For your convenience, we have included below definitions of terms used in this prospectus that are specific to the business of CastlePoint. In addition, we have provided a Glossary, beginning on page G-1, of selected insurance, reinsurance and investment terms.

In this prospectus, amounts are expressed in U.S. dollars and the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"), except as otherwise indicated.

This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing in us. You should read the entire prospectus carefully, including the sections entitled "Risk Factors", "A Warning About Forward-Looking Statements" and the financial information contained in this prospectus before investing in us. Except as otherwise noted, all information in this prospectus assumes that all of the common shares offered hereby will be sold, but that the underwriters will not exercise their over-allotment option. Percentages of ownership presented on a fully diluted basis assume the issuance of our common shares pursuant to (i) the exercise of 1,082,666 options we granted under our 2006 long-term equity compensation plan as described herein; and (ii) the exercise by Tower Group, Inc. of the warrants we granted to it to purchase 1,127,000 of our common shares.

We are a Bermuda holding company organized to provide property and casualty insurance and reinsurance business solutions, products and services primarily to small insurance companies and program underwriting agents in the United States. We were incorporated in November 2005 to take advantage of opportunities that we believe exist in the insurance and reinsurance industry for traditional quota share reinsurance, insurance risk-sharing and program business as well as insurance company services that can be purchased on a stand-alone, or unbundled basis to small insurance companies and program underwriting agents.

Tower Group, Inc., a Delaware corporation, was our sponsor and is our largest customer for our reinsurance and risk-sharing products. Formed in 1990, Tower is a publicly traded insurance holding company listed on the Nasdaq Global Select Market and headquartered in New York. It offers property and casualty insurance products and services through its insurance company subsidiaries and insurance service subsidiaries to small to mid-sized businesses and to individuals in New York, New Jersey and Massachusetts.

Reinsurance is an arrangement by which one insurance company, called the reinsurer, agrees to indemnify another insurance (or reinsurance) company, called the ceding company, against all or a portion of the insurance (or reinsurance) risks underwritten by the ceding company under one or more policies. As part of our reinsurance solutions, we primarily focus on offering traditional quota share reinsurance to insurance companies with limited capital base, which is the amount of capital against which they can write business, to enable these companies to overcome this limitation. We refer to traditional quota share reinsurance as a type of reinsurance whereby a reinsurer provides reinsurance coverage to an insurance company on a pro rata basis based on a ceding percentage without any provisions to limit meaningful losses within the contractual limits. Prior to spring of 2005, as an alternative to traditional quota share reinsurance, many reinsurers offered finite reinsurance which, according to the National Association of Insurance Commissioners, or the NAIC, is a type of reinsurance that transfers a finite or limited amount of risk to the reinsurer, whereby risk is reduced through accounting or financial methods, along with the actual transfer of economic risk. In spring of 2005, various regulatory agencies began to scrutinize whether many finite quota share reinsurance agreements contained a sufficient level of risk transfer to qualify as reinsurance under applicable accounting principles. We believe that this scrutiny has reduced the market for finite quota share reinsurance and is creating a greater demand for traditional quota share reinsurance.

We offer traditional quota share reinsurance and, to a lesser extent, other ancillary reinsurance coverage through CastlePoint Re, our Bermuda reinsurance company subsidiary. Our primary target market is mainly small insurance companies with surplus of less than $100 million that underwrite

commercial and personal lines policies with low to moderate hazard risks. CastlePoint Re has received a Financial Strength rating of "A-" (Excellent) from A.M. Best Company, Inc., which is the fourth highest of fifteen rating levels and indicates A.M. Best's opinion of our financial strength and ability to meet ongoing obligations to our future policyholders. The maintenance of the assigned rating depends upon CastlePoint Re operating in a manner consistent with the business plan presented to A.M. Best. A.M. Best formally evaluates its Financial Strength ratings of insurance companies at least once every twelve months and monitors the performance of rated companies throughout the year.

Insurance risk-sharing business refers to various risk-sharing arrangements, such as pooling or sharing of premiums and losses between the U.S. licensed insurance companies we own or plan to acquire and other insurance companies based upon their respective percentage allocations, or appointing other insurance companies as our program underwriting agents and then having those insurance companies assume through reinsurance a portion of the business they produce as program underwriting agents. In addition to providing traditional quota share reinsurance, we offer insurance risk-sharing solutions to insurance companies with a limited capital base by enabling them to transfer or cede premiums on a pro rata basis to the U.S. licensed insurance companies we own or plan to acquire and thereby expand their capacity to write premiums. This solution will also allow insurance companies with inadequate ratings or limited licensing access to the higher rating and broad based licensing capabilities of our U.S. licensed insurance companies. We plan to offer insurance risk-sharing solutions to customers writing policies with low to moderate hazard risks. These solutions will include pooling or sharing of premiums and losses between our U.S. licensed insurance companies and other insurance companies based upon their respective percentage allocations, or appointing other insurance companies as our program underwriting agents and then having those insurance companies assume through reinsurance a portion of the business they produce as program underwriting agents.

We also offer traditional quota share and insurance risk-sharing solutions to other insurance companies with a larger capital base, such as Tower, that are seeking to manage their capital more efficiently by ceding risk to us to generate commission and fee income as well as to expand their capacity to write business in certain geographic areas. For the three months ended September 30, 2006, the premiums for reinsurance business we received from Tower represented approximately 91% of our premium revenue. We expect to derive at least 70% or more of our reinsurance business and insurance business from Tower and its subsidiaries during our first two years of operation. Thereafter, we plan to gradually develop business opportunities from other distribution sources and reduce the percentage of business derived from Tower.

In addition to providing risk-sharing solutions to insurance companies, we provide comprehensive business solutions, products and services to program underwriting agents that underwrite program business. Program business refers to narrowly defined classes of business that are underwritten on an individual policy basis by program underwriting agents on behalf of insurance companies. Program underwriting agents are insurance intermediaries that aggregate insurance business from retail and wholesale agents and manage business on behalf of insurance companies. Their functions may include some or all of risk selection, underwriting, premium collection, policy form and design, and client service. We believe that, after prolonged soft market conditions that ended in 2001, many insurance companies have either ceased or significantly reduced writing program business due to lack of profitability or reduced commissions paid to program underwriting agents. Despite improved profitability in recent years, which has attracted more insurers and reinsurers to support program

business, we believe this market is still underserved and that program underwriting agents are seeking alternatives to increase their profit margin. In response to the market opportunities that we believe are available in program business and to differentiate ourselves from other insurance companies writing program business, we plan to offer a broad line of products to expand the range of program opportunity available in the marketplace. In addition, we plan to structure program business utilizing different approaches including assuming most of the underwriting risk through CastlePoint Insurance Company or another U.S. licensed insurance company we plan to acquire or through CastlePoint Re, as well as reinsuring a substantial amount of program business with third party reinsurers to generate commission income. We also plan to provide alternative risk transfer capability to program underwriting agents to enable them to participate in the underwriting risk on the business they produce.

In connection with our reinsurance, insurance risk-sharing and program business, we plan to offer broad lines of business, including commercial package, fire and allied lines, commercial general liability, workers compensation, homeowners and personal dwellings, professional liability, commercial and personal inland marine and commercial and personal automobile. We also plan to offer a comprehensive set of insurance company services which can be purchased separately from our product offerings on an unbundled basis, including claims handling, policy administration, insurance technology and consulting services such as underwriting and claims audits, program design and reinsurance structuring. We believe these services should facilitate marketing our insurance and reinsurance products and solutions to program underwriting agents, as well as generate fee income.

To provide insurance risk-sharing and program business solutions, we recently acquired one U.S. licensed insurance company and we plan to acquire, subject to any necessary regulatory approvals, at least one additional U.S. licensed insurance company in the next nine months. On December 4, 2006, CastlePoint Management purchased from Tower all of the issued and outstanding capital stock of a company currently known as Tower Indemnity Company of America, a U.S. licensed insurance company, for a cash purchase price of $350,000 plus approximately $8.4 million, which was the adjusted statutory surplus of that company at closing. We expect to rename this company "CastlePoint Insurance Company" in early 2007 and we refer to it as such in this prospectus. Statutory capital and surplus refers to an insurer's assets minus its liabilities, calculated using statutory accounting principles. Our acquisition of CastlePoint Insurance Company was approved by our audit committee. As of the closing, CastlePoint Insurance Company did not conduct any business and did not have any premium income, obligations relating to insurance policies, employees, operations or real estate. We expect CastlePoint Insurance Company's pooling agreements with Tower to be effective as of January 1, 2007, subject to regulatory approval by the New York State Insurance Department. We expect such regulatory approval may take up to 90 days to obtain.

We anticipate that CastlePoint Insurance Company will write insurance, on an admitted basis, in the states of New York and New Jersey, as well as in those states in which CastlePoint Insurance Company subsequently applies to become, and is approved as, a licensed insurer. Until our U.S. insurance companies are broadly licensed, Tower's insurance companies are issuing policies in those states where we do not have licenses for the brokerage business, traditional program business, specialty program business and insurance risk-sharing business pursuant to program management agreements between CastlePoint and Tower's insurance companies.

We plan to acquire at least one additional U.S. licensed insurance company, either with little or no pre-existing business or with ongoing insurance operations, and with broader licensing, which will permit us to write insurance business in more United States jurisdictions on an admitted and non-admitted basis. While we are currently looking at a number of potential U.S. licensed insurance

companies in addition to CastlePoint Insurance Company, we have not yet identified any other targets with any reasonable certainty, and we have not entered into any related letters of intent at this time. We anticipate that the purchase price for our U.S. licensed insurance companies will be paid in cash and will not exceed in the aggregate $75 million, including approximately $8.8 million paid to Tower to acquire CastlePoint Insurance Company. Based on our discussions with A.M. Best, we expect that CastlePoint Insurance Company and any other U.S. licensed insurance companies that we may acquire, upon our acquisition and capitalization of such companies, will also receive a Financial Strength rating of "A-" (Excellent), in view of our capital funding plans, management experience and relationship with Tower.

Strategic investments are integral to our overall strategy and complement our product offerings in reinsurance, risk sharing and programs. We expect to make strategic investments in some of our clients, including Tower, to strengthen our distribution system in order to provide us with more stable and predictable sources of business. We refer to clients in which we make strategic investments as "strategic clients." By developing strategic clients, we plan to build a distribution system that sources a significant portion of our overall business from these clients. We believe that this system has advantages over the typical reinsurance business model because, with respect to our strategic clients, we should be able to influence their reinsurance programs so that such clients can fully leverage their access to capital, rating, product platform and scale, while also maintaining a stable, long-term reinsurance relationship with us. In addition, we believe that we will be able to manage the market cycle better by expanding or contracting the amount of business from third party clients depending upon the market conditions, while maintaining a stable base of business from our strategic clients.

We will consider making minority investments in clients that are privately held companies only when there is a clearly defined exit strategy, and we also will consider making such investments in clients that are publicly held companies, such as Tower. In addition, we may enter into joint ventures or majority investments where we have significant control, and we may acquire other companies that are our clients. We will make strategic investments in clients generally under the circumstances where we expect that the implementation of our pooling and reinsurance solutions with them will improve their financial performance and hence our financial performance, through the risk sharing and reinsurance agreements that we will enter into with these clients.

Consistent with this strategy, on December 4, 2006, CastlePoint Re purchased 40,000 shares of non-cumulative convertible perpetual preferred stock of Tower for an aggregate consideration of $40 million. The non-cumulative convertible perpetual preferred stock is non-voting and has a liquidation preference of $1,000 per share. Dividends are non-cumulative and payable quarterly at a rate of 8.66% per annum. The non-cumulative convertible perpetual preferred stock is redeemable by Tower at any time, in whole or in part, at a price per share equal to the liquidation preference plus declared and unpaid dividends, upon 30 days' prior notice. Our purchase of Tower's convertible perpetual preferred stock was approved by our audit committee. For a description of additional terms of Tower's non-cumulative convertible perpetual preferred stock, see "Business—Strategic Investments."

With respect to any additional strategic investments in Tower, to the extent any such investments will be made, we expect that they will likely occur in connection with the acquisition of a book of business or another company by Tower at such times that Tower makes these types of acquisitions and when our own analysis of such proposed transactions of Tower indicates that these acquisitions will be accretive to Tower. To the extent Tower's book of business remains attractive and profitable, we may gradually increase our ownership in Tower and develop a more clearly articulated plan to address our future relationship with Tower. However, due to many factors such as Tower's stock price and its need for capital as well as our stock price and our willingness to make future investments in Tower, we cannot predict with any certainty whether, when or to what extent we may make any additional

strategic investments in Tower. We strongly believe that all of our strategic investments in Tower must create value for our shareholders.

Tower sponsored our formation and entered into a long-term strategic relationship with us to secure a stable source of traditional quota share reinsurance and insurance risk-sharing capability to support its anticipated future growth. This strategic relationship with Tower allows us to participate as a reinsurer, and we expect that it will allow us through our U.S. licensed insurance companies to participate as a pooling participant, in Tower's book of business that it has historically underwritten profitably. Tower, through its insurance company subsidiaries, offers commercial insurance products to small to medium-size businesses and personal insurance products to individuals. Tower's two insurance company subsidiaries are Tower Insurance Company of New York, a New York corporation that has been rated "A-" (Excellent) by A.M. Best since October 2004, and Tower National Insurance Company, a Massachusetts corporation that has been rated "A-" (Excellent) by A.M. Best since October 2005. Tower's insurance company subsidiaries currently write business in New York State, New Jersey and Massachusetts.

Tower recently announced its plans for further regional expansion, including its agreement to purchase Preserver Group, Inc., or Preserver, a privately held company that specializes in small commercial and personal lines insurance in the northeastern region of the United States. If Tower's acquisition of Preserver closes, we and Tower agreed that, because Preserver writes brokerage business, the Preserver premiums will be covered under our brokerage business pooling agreement and brokerage business quota share reinsurance agreement with Tower, such that CastlePoint will receive approximately 49% of the increase in Tower's premium volume resulting from Tower's acquisition of Preserver, as well as approximately 49% of Tower's overall brokerage business. We and Tower agreed that, with respect to any insurance company Tower may acquire during the term of our master agreement, subject to the receipt of any necessary regulatory approvals, we will have a right of first refusal to assume such company's historical losses pursuant to a loss portfolio transfer agreement, which must be on market competitive terms. Accordingly, if Tower's acquisition of Preserver closes, contemporaneously with such closing and subject to the receipt of any necessary regulatory approvals, it is currently proposed that CastlePoint Re will enter into a loss portfolio transfer agreement to reinsure a minimum of 75% of Preserver's historical losses.

Although both we and Tower offer property and casualty insurance products and services on a primary insurance level, there are significant differences between the business operations of our respective companies. Tower underwrites "brokerage business," which we refer to as broad classes of business that are underwritten on an individual policy basis by Tower's staff that are produced through wholesale and retail agents. By contrast, we generate our business from other insurance companies and program underwriting agents that have established books of brokerage business and program business that they underwrite on an individual policy basis utilizing their own underwriting staff. Such brokerage business and program business are produced through their independent agency distribution system comprised of independent wholesale and retail agents or on a direct basis to consumers. We also will offer insurance risk-sharing solutions, as well as unbundled services, neither of which Tower will offer. The agreements we entered into with Tower help differentiate the types of brokerage business, traditional program business and specialty program business we and our subsidiaries, on the one hand, and Tower and its subsidiaries, on the other hand, engage or will engage in the future. As a result, we believe that our products, services and distribution systems do not overlap directly with those of Tower.

In connection with our formation and capitalization, we issued 2,555,000 of our common shares, representing at the time of issuance 100% of our outstanding common shares, to Tower in consideration of its investment of $15.0 million in us. The common shares held by Tower currently represent 8.6% of our outstanding common shares. We also issued ten-year warrants to Tower to

purchase an additional 1,127,000 of our common shares at an exercise price of $10.00 per share, which shares represent 3.5% of our common shares outstanding on a fully-diluted basis. The shares held by Tower, together with the shares issuable upon exercise of the Tower warrants, represent 11.6% of our outstanding common shares on a fully-diluted basis. After giving effect to this offering, the common shares held by Tower will represent % of our outstanding common shares ( % if the underwriters' over-allotment option is exercised in full). Under our bye-laws, Tower's voting power in us is limited to 9.5%. Tower is a publicly traded insurance holding company listed on the Nasdaq Global Select Market. Michael H. Lee, the Chairman of the Board and Chief Executive Officer of CastlePoint Holdings and Chief Executive Officer of CastlePoint Management, is also Chairman of the Board, President and Chief Executive Officer of Tower.

Pursuant to a master agreement and certain reinsurance agreements and other agreements that we entered into in April 2006 with Tower and/or certain of its subsidiaries, we provide traditional quota share reinsurance to Tower and other types of ancillary reinsurance arrangements. Currently, Tower cedes 40% under the brokerage business and 50% under the traditional program business quota share reinsurance agreements. Tower currently cedes 85% of the specialty program business and insurance risk-sharing business to CastlePoint Re through the related quota share reinsurance agreement. Through CastlePoint Insurance Company, we also will be able to enter into three pooling agreements with Tower, expected to be effective as of January 1, 2007, to supplement or replace Tower's management agreements with other insurance companies. The pooling agreements ensure that all premiums and losses will be shared by us and Tower proportionately from the first claim dollar based on our respective participation percentages. We and Tower have agreed that, under our pooling agreements and pool management agreements, Tower will manage the brokerage business that it has historically written, and we will manage the traditional program business, and specialty program business and insurance risk-sharing business. CastlePoint Management and/or our U.S. licensed insurance companies will manage the insurance risk-sharing business. We will also utilize our U.S. licensed insurance companies to underwrite insurance risk-sharing business. The reinsurance agreements and the pooling agreements have a term of three years, subject to certain early termination rights of the parties. We and Tower have agreed to extend the respective terms of all such agreements for an additional year. For more information, including a description of certain early termination rights of the parties to these agreements, see "Certain Relationships and Related Transactions—Our Arrangements with Tower and its Subsidiaries."

Our pooling agreements with Tower Insurance Company of New York are subject to review and modification by the New York State Insurance Department. We expect that agreements we may enter into with the subsidiaries of Preserver, if any, will require approval of the domiciliary states of such subsidiaries. Tower is in the process of responding to certain requests of the New York State Insurance Department and the Massachusetts Division of Insurance regarding certain of our agreements with Tower's insurance companies. For more information, see "Risk Factors—Our agreements with Tower's insurance companies are subject to regulatory review and may be changed, which would have a material adverse effect on our business, financial condition and results of operations" and "Certain Relationships and Related Transactions—Master Agreement—Status of Regulatory Approvals."

Tower's insurance companies and CastlePoint Insurance Company, for 2007, will initially participate 85% and 15%, respectively, in the brokerage business pool, 50% each in the traditional program business pool, and 15% and 85%, respectively, in the specialty program business pool. The pooling percentages under the pooling agreements are subject to unilateral adjustment by the manager of the relevant pool, or by mutual agreement of the parties. The quota share reinsurance arrangements with respect to the brokerage business will continue after the pooling agreements commence and will apply to Tower's share of the brokerage business pool. As of the effective date of the pooling

agreements, which we expect to be January 1, 2007, we anticipate that Tower will cede 40% (for 2007) of its brokerage business to CastlePoint Re under the brokerage business quota share reinsurance agreement. The quota share reinsurance agreement with respect to the specialty program business and insurance risk-sharing business will be, and the quota share reinsurance agreement with respect to the traditional program business may be, terminated after CastlePoint Insurance Company enters into the pooling agreements for such business with Tower's insurance companies. Insurance risk-sharing arrangements will be managed by us or by Tower and will be subject to one of our three pooling agreements with Tower's insurance companies, depending on the nature of the business, namely, whether it is brokerage business, traditional program business or specialty program business. We anticipate that CastlePoint Management's role may be reduced after we acquire our U.S. licensed insurance companies and they become broadly licensed, and that CastlePoint Management will act primarily as a service company, providing claims handling and administration, operational audit support and regulatory compliance services through its program management agreements. For a description of certain of the terms and provisions of our agreements with Tower and its subsidiaries, see "Certain Relationship and Related Transactions—Our Arrangements with Tower and its Subsidiaries."

We believe we have the following competitive strengths, which position us to underwrite both insurance and reinsurance business profitably:

Despite our competitive strengths, we believe that our lack of brand recognition, the financial size of our company and our A.M. Best rating may make our reinsurance product offerings less attractive to insurance company customers than those of some of our competitors that enjoy greater brand awareness, larger surplus and a higher A.M. Best rating than we do. These factors also may apply, although to a lesser extent, to our ability to attract business at the primary insurance level.

Our company and our business are subject to numerous and substantial risks, as more fully described in the section entitled "Risk Factors" beginning on page 16 of this prospectus. Two significant risks associated with our company and our business are our status as a start-up company and our close business relationship with Tower. You should carefully consider all of the information contained in this prospectus prior to investing in our common shares. In particular, we urge you to carefully consider the information set forth under "Risk Factors" for a discussion of risks and uncertainties relating to us, our subsidiaries, our business and an investment in our common shares.

On April 4 and April 5, 2006, we sold an aggregate of 27,025,000 common shares in a private placement exempt from registration under the Securities Act, which we refer to in this prospectus as the private offering, at an offering price of $10.00 per share, except for 500,000 common shares sold at $9.30 per share to Friedman, Billings, Ramsey Group, Inc., the parent company of Friedman, Billings,

Ramsey & Co., Inc. or FBR, the initial purchaser of many of the shares. FBR resold the shares it purchased to investors pursuant to Rule 144A and Regulation S under the Securities Act. We raised approximately $249.2 million in net proceeds from the private offering. We used these proceeds and the $15.0 million Tower invested in us as follows: (1) approximately $250 million to capitalize our indirect reinsurance subsidiary, CastlePoint Re; and (2) approximately $14.4 million to capitalize our intermediate Bermuda holding company, CastlePoint Bermuda Holdings, which in turn directly owns CastlePoint Re. See "Our Organization" below.

In connection with the private offering, we entered into a registration rights agreement for the benefit of the holders of the shares sold in the private offering. We also entered into a registration rights agreement with Tower with respect to its ownership of 2,555,000 of our common shares and 1,127,000 common shares issuable upon exercise of the warrants we granted to Tower. See "Description of Share Capital—Registration Rights." Tower is registering 2,555,000 of our common shares on the shelf registration statement (No. 333-134628) that we filed with the SEC, which provides for the resale of our common shares sold in the private offering. The shelf registration statement has not yet been declared effective.

CastlePoint Holdings was incorporated on November 16, 2005 as a company limited by shares under Bermuda law. Our reinsurance subsidiary, CastlePoint Re, was incorporated on March 9, 2006 and was licensed as a Class 3 Bermuda exempted insurer on March 22, 2006. CastlePoint Re commenced writing business as of April 6, 2006, following its capitalization on April 5, 2006 with a portion of the net proceeds of the private offering. As of September 30, 2006, CastlePoint Re was responsible for more than 97.0% of our revenues. As of September 30, 2006, CastlePoint Re earned $47.4 million of reinsurance premium, primarily through its traditional quota share reinsurance agreements and a limited amount through its casualty excess of loss reinsurance agreements with Tower that accounted for more than 98.0% of the premiums earned by us. CastlePoint Re primarily focuses on providing traditional quota share reinsurance, as well as casualty excess of loss reinsurance and other ancillary reinsurance coverage. Under excess of loss reinsurance agreements (which are written in layers or bands of coverage up to a specified amount), we generally receive a specified premium for the risk we assume and indemnify the cedent against all or a specified portion of losses and expenses in excess of a specified dollar or percentage amount.

CastlePoint Management, a Delaware corporation and our program management company, was incorporated in January 2006. It currently produces insurance risk sharing as well as traditional program business and specialty program business utilizing Tower's insurance company subsidiaries. CastlePoint Management receives commission income from Tower's insurance companies for producing insurance risk-sharing business as well as traditional and specialty program business. CastlePoint Management also provides insurance company services to insurance companies and program underwriting agencies. As of September 30, 2006, CastlePoint Management was responsible for less than 1.0% of our revenues. Following our acquisition of CastlePoint Insurance Company from Tower on December 4, 2006, and planned acquisition of at least one additional U.S. licensed insurance company in the next nine months, the significance of CastlePoint Management in our U.S. operations may be reduced, including the possibility that CastlePoint Management would become a service company for our U.S. licensed insurance companies. CastlePoint Bermuda Holdings, our Bermuda intermediate holding company, was incorporated on March 27, 2006.

The following chart summarizes our organization and our strategic relationship and agreements with Tower and its subsidiaries, before and after the issuance of our common shares in this offering. We may change our organizational structure from time to time as we expand our business or as market conditions change.

The principal executive office of CastlePoint Holdings is currently located at Victoria Hall, 11 Victoria Street, Hamilton HM 11, Bermuda, and our telephone number is (441) 294-6409.

The number of common shares shown to be outstanding after this offering excludes:

The following table sets forth our summary historical financial information for the periods ended and as of the dates indicated. The historical results are not necessarily indicative of results to be expected in any future period. This financial information is derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. You should read the following summary historical financial information in conjunction with the information contained in this prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this prospectus. Many factors may cause our future results to differ materially from the financial information and results presented below, including those factors discussed in "Risk Factors."

An investment in our shares involves a high degree of risk. Before making an investment decision, you should carefully consider all of the risks described in this prospectus. If any of the risks discussed in this prospectus actually occur, our business, financial condition and results of operations could be materially and adversely affected. If this were to happen, the price of our shares could decline significantly and you may lose all or a part of your investment. Our actual results could differ materially from those anticipated by our forward-looking statements as a result of the risk factors below. See also "A Warning About Forward-Looking Statements."

We were formed in November 2005 and are not yet able to engage in the primary insurance business because we have not received all of the necessary regulatory approvals. In April 2006, CastlePoint Re received from the Bermuda Monetary Authority a registration certificate under the Insurance Act of 1978 as a Class 3 Bermuda exempted insurer. In addition, on March 9, 2006, Tower submitted all of our agreements with Tower and its subsidiaries to the New York State Insurance Department and received its approval of the quota share reinsurance agreements, as amended, on June 1, 2006. The pooling agreements, the program management agreements and the service and expense sharing agreements are subject to further review, approval and modification by the New York State Insurance Department. We expect that we will obtain approvals of such agreements from the New York State Insurance Department in the near future. All of such agreements are also subject to the review and approval of the domiciliary states of the U.S. licensed insurance companies we own or plan to acquire or that Tower may acquire, to the extent such companies participate in these agreements. We expect that agreements we may enter into with the subsidiaries of Preserver, if any, will require approval of the domiciliary states of such subsidiaries. Further, all of our agreements with Tower National Insurance Company are subject to review and modification by the Massachusetts Division of Insurance. For a description of the status of those approvals and certain related information, see "—Our agreements with Tower's insurance companies are subject to regulatory review and may be changed, which would have a material adverse effect on our business, financial condition and results of operations" and "Certain Relationships and Related Transactions—Master Agreement—Status of Regulatory Approvals."

Finally, we plan to acquire at least one additional U.S. licensed insurance company in the next nine months, subject to receipt of regulatory approvals (which could take up to several months as a general matter, depending on the domiciliary states involved). In December 2006, we acquired CastlePoint Insurance Company, a New York domestic stock property/casualty insurer that is licensed to transact insurance in the states of New York and New Jersey. We expect that CastlePoint Insurance Company will, and any other U.S. licensed insurance companies that we may acquire may, enter into the pooling agreements with Tower Insurance Company of New York. We expect that the parties to the pooling agreements, including Tower Insurance Company of New York, as well as any companies that Tower may acquire, including the subsidiaries of Preserver, that may desire to participate in our quota share reinsurance agreements or our pooling agreements, will be required to obtain the approval or non-disapproval of their domiciliary insurance regulators (which, in the case of CastlePoint Insurance Company, will be the New York State Insurance Department) prior to entering into the pooling agreements. We expect that such regulatory approvals (or non-disapprovals) may be obtained within approximately ninety days of submissions. While we are currently looking at a number of potential U.S. licensed insurance companies in addition to CastlePoint Insurance Company, we have not yet identified any other targets with any reasonable certainty, and we have not entered into any related letters of intent at this time. We anticipate that the purchase price for our U.S. licensed insurance companies will be paid in cash and will not exceed in the aggregate $75 million, including approximately $8.8 million paid to Tower to acquire CastlePoint Insurance Company.

We cannot assure you that we will obtain the regulatory approvals necessary for us to conduct our business as planned or that any approval granted will not be subject to conditions that restrict our operations. In addition, we cannot assure you that we will raise the funds necessary to capitalize our subsidiaries in order to further grow our business. As a newly formed company, we have a very limited operating history on which you can base an estimate of our future earnings prospects.

For the quarter ended September 30, 2006, the business we received from Tower represented approximately 91% of our business. We expect to derive at least 70% or more of our reinsurance business and insurance business from Tower and its subsidiaries during our first two years of operation, and also expect that Tower will account for a substantial portion of our reinsurance and insurance business throughout the following few years of operation. We have commenced our reinsurance business by providing traditional quota share reinsurance primarily to Tower's insurance companies, assuming initially a 30% quota share portion of the net liabilities (described in our reinsurance agreements with Tower as the liability for losses and loss adjustment expenses which Tower's insurance companies retain net for their own accounts and unreinsured in any way, except for excess of loss reinsurance, after recoveries (indemnity payments received) from inuring reinsurance) of the policies relating to each of Tower's brokerage business and traditional program business, and an 85% quota share portion of the net liabilities less recoveries of the policies relating to Tower's specialty program business and insurance risk-sharing business. Effective as of July 1, 2006, we and Tower have changed the amount ceded by Tower to 40% (from 30%) under the brokerage business and to 50% (from 30%) under the traditional program business quota share reinsurance agreements. Our quota share portions under the quota share reinsurance agreements may be adjusted by Tower, subject to a minimum portion of 25% and a maximum portion of 45% with respect the brokerage business, a minimum portion of 25% and a maximum portion of 45% (as initially executed, and a minimum portion of 50% and a maximum portion of 75% as changed by our agreement with Tower, effective July 1, 2006) with respect to the traditional program business, and a minimum portion of 75% and a maximum portion of 85% with respect to the specialty program business and insurance risk-sharing business. In addition, through CastlePoint Re, we currently assume 50% of the ceded first property excess of loss layer, 30% of the ceded second property excess of loss layer and 50% of the ceded first multiline excess of loss layer (that is, the layer applicable to all lines of business with certain exceptions, which exclusions include, but are not limited to, umbrella coverage, professional liability coverage, aircraft liability coverage, earthquake coverage and financial guarantee coverage) under Tower's 2007 property and casualty excess of loss reinsurance agreements. The term "loss layer" refers to the interval between the retention or attachment point and the maximum limit of indemnity for which each reinsurer is responsible under these excess of loss reinsurance agreements. Further, through CastlePoint Re, as of July 1, 2006, we participate as a reinsurer in a property catastrophe excess of loss reinsurance agreement with two of Tower's insurance companies at a level of 30% of the first three layers of that agreement, subject to any required regulatory approvals.

We will be able to commence our primary insurance business in New York and New Jersey (where CastlePoint Insurance Company is licensed) once additional filings, including rate and form filings (if and as necessary for our lines of business), are made by us and approved by the insurance regulatory authorities of those states. Once we acquire at least one additional insurance company licensed in other states of the United States, and obtain the required regulatory approvals and licenses for it, we will be able to write insurance in the states where such company is licensed. We expect that CastlePoint Insurance Company will, and any other U.S. licensed insurance companies that we may acquire may, and subject to the receipt of any required regulatory approvals or third party consents, enter into three pooling agreements with Tower Insurance Company of New York. The range of our percentage participation in the brokerage business pool will be 25% to 45%, and Tower may adjust our percentage participation within that range unilaterally (effective as of the date that is six months following the effective date of the brokerage business pooling agreement, and from time to time, as of any six month anniversary of the effective date thereafter), while we can adjust our percentage participation below

25% upon mutual agreement with Tower as of any calendar quarter. In connection with Tower's proposed acquisition of Preserver, for 2007, if the acquisition closes, we and Tower have agreed that our percentage participation in the brokerage business pool will be 15%, while the quota share percentage ceded to CastlePoint Re will be 40%, thus resulting in approximately 49% of Tower's brokerage business being transferred to CastlePoint. For a discussion of the reasons for these changes, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview." Our initial percentage participation in the traditional program business pool will be 50%, which we may adjust unilaterally (effective as of the date that is six months following the effective date of the traditional program business pooling agreement, and from time to time, as of any six month anniversary of the effective date thereafter), or upon mutual agreement with Tower as of any calendar quarter, subject to a minimum participation of 50% and a maximum participation of 85%. Our initial percentage participation in the specialty program business will be 85%, which we may adjust unilaterally (effective as of the date that is six months following the effective date of the specialty program business pooling agreement, and from time to time, as of any six month anniversary of the effective date thereafter), or upon mutual agreement with Tower as of any calendar quarter, subject to a minimum participation of 50% and a maximum participation of 85%. In addition, our capabilities to provide insurance company services will be based, at least initially, on Tower's infrastructure.

Accordingly, we are dependent on Tower and its subsidiaries for a substantial portion of our business. Although the reinsurance agreements, the service and expense sharing agreement we entered into with Tower and/or certain of its subsidiaries, and the pooling agreements we will enter into with such parties, each have a term of four years (as extended by our agreement with Tower for an additional year), subject to certain early termination provisions, the termination of any of these contracts would reduce our revenues during our initial years of operation and increase our dependence on third party insurance companies, program underwriting agents and service providers to support our business and would have a material adverse effect on us. Each party to each of the reinsurance agreements has the right to terminate the applicable reinsurance agreement as of the date 12 months after the effective date of such agreement and on the 12-month anniversary thereafter. In addition, each party to each of the pooling agreements may terminate its participation in the applicable pooling agreement at the end of a quarter upon 60 days' notice. Further, we have modified the program management agreements to provide that they can be terminated by any party upon 60 days' notice. However, we and Tower have revised the master agreement to provide that neither of us will cause or permit our respective subsidiaries to exercise such annual termination right in the quota share reinsurance agreements, quarterly termination rights in the pooling agreements and 60 days' notice termination right in the program management agreements. This agreement not to exercise the annual termination right, quarterly termination right and 60 days' notice termination right does not affect the other early termination provisions described under "Certain Relationships and Related Transactions—Our Arrangements with Tower and its Subsidiaries."

Our success depends in part upon our ability to assess accurately the risks associated with the businesses that we reinsure and will in the future insure. Significant periods of time often elapse between the occurrence of an insured loss, the reporting of the loss to an insurer and payment by the insurer of that loss. In connection with our writing reinsurance business and recognizing liabilities for unpaid losses, we establish loss reserves (which are liabilities we establish to reflect the estimated cost of claims payments and the related expenses that we will ultimately be required to pay in respect of reinsurance we have written) as balance sheet liabilities, and we will also do so for the insurance business we plan to write in the future. These reserves represent estimates of amounts needed to pay reported losses (which are claims or potential claims that have been identified to us as a reinsurer by a ceding company, or will be identified to us as an insurer by an insured once we begin to write insurance business) and unreported losses and the related loss adjustment expense. Loss reserves are only an estimate at a point in time of what an insurer anticipates the ultimate costs of claims to be and

therefore cannot and do not represent an exact calculation of actual ultimate liability. Estimating loss reserves is a difficult and complex process involving many variables and subjective judgments, particularly for new companies, such as ours, that have no loss development experience.

As part of our reserving process, we review historical data as well as actuarial and statistical projections and consider the impact of various factors such as:

This process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting future events. There is no precise method, however, for evaluating the impact of any specific factor on the adequacy of reserves, and actual results are likely to differ from original estimates. In addition, unforeseen losses, the type or magnitude of which we cannot predict, may emerge in the future. We establish or adjust reserves for CastlePoint Re in part based upon loss data received from the ceding companies with which we do business, including Tower. Although we conduct due diligence on the business that we reinsure, the profitability of such business is influenced by underwriting and pricing decisions made by the ceding companies with respect to the business reinsured. We will establish or adjust reserves for CastlePoint Insurance Company and any additional U.S. licensed insurance companies that we may acquire based upon information that we will receive from program underwriting agents with whom we do business. There is a time delay between the receipt and recording of claims results by the ceding insurance companies or by the program underwriting agents and the receipt and recording of those results by us. As a result of this time delay, reserves for CastlePoint Re and for the U.S. licensed insurance companies to be acquired by us will be more difficult to timely and accurately estimate.

As of September 30, 2006, we had $22.2 million of loss reserves. We believe such reserves have been adequate and have not made any adjustments due to deficiencies. However, since CastlePoint Re is a newly formed company, and other than through its traditional quota share reinsurance business from Tower, it has a very limited loss experience and a relatively small population of underlying risks, CastlePoint Re is exposed to an increased likelihood that actual results may not conform to our estimates.

According to Tower's annual report on Form 10-K for the year ended December 31, 2005, the loss reserves for Tower's insurance companies were $101.8 million as of December 31, 2005, $37.0 million as of December 31, 2004 and $24.4 million as of December 31, 2003. As a reinsurer of Tower, we are aware that it believes such loss reserves have been adequate and that Tower has not had to make any adjustments due to deficiencies.

To the extent our loss reserves are insufficient to cover actual losses or loss adjustment expenses, we will have to adjust our loss reserves and may incur charges to our earnings in the period in which such adjustment is made, which could have a material adverse effect on our business, financial condition and results of operations.

Because (i) Tower sponsored our formation, (ii) Tower's common shares currently represent 8.6% of our outstanding common shares and we also issued ten-year warrants to Tower to purchase an additional 1,127,000 of our common shares at an exercise price of $10.00 per share, which brings Tower's ownership interest in us to 11.6% on a fully-diluted basis if the warrants are exercised in full, and (iii) we and Tower have overlapping executive management, we have been deemed an affiliate of

Tower by the New York State Insurance Department and the Massachusetts Division of Insurance, and we may be deemed an affiliate of Tower by other regulatory authorities, including other state insurance regulatory authorities. In that event, any transaction or agreement between us and Tower or any of its subsidiaries may be subject to regulatory review and modification.

Due to the above reasons and because Tower owned 100% of our shares when our agreements with Tower's insurance companies were initially negotiated and was deemed to control us under the provisions of the New York State Insurance Law and applicable regulations, we could not enter into any of the reinsurance agreements, pooling agreements, program management agreement, service and expense sharing agreement or any other agreement with Tower's insurance companies unless Tower gave 30 days advance notice to the New York State Insurance Department and the New York State Insurance Department did not disapprove of such agreements within such period. Tower initiated the submission of such agreements with the New York State Insurance Department on March 9, 2006 and the Massachusetts Division of Insurance on March 28, 2006. Tower received the approval of the New York State Insurance Department on June 1, 2006 with respect to the quota share reinsurance agreements. The New York State Insurance Department has informed Tower of its position that we and Tower are in the same holding company system. Accordingly, all of our agreements with Tower Insurance Company of New York will be subject to review by the New York State Insurance Department. The reinsurance agreements were amended and restated primarily to provide for an annual termination right by the parties to the agreements. The pooling agreements, the program management agreement and the service and expense sharing agreement are under review by the New York State Insurance Department. For information about certain recommendations of the New York State Insurance Department relating to these agreements, see "Certain Relationships and Related Transactions—Master Agreement—Status of Regulatory Approvals." We expect that Tower will obtain approvals of such arrangements from the New York State Insurance Department in the near future.

All of our agreements with Tower National Insurance Company are subject to review and modification by the Massachusetts Division of Insurance. For a description of the status of those approvals and certain related information, see "Certain Relationships and Related Transactions—Master Agreement—Status of Regulatory Approvals."

The pooling agreements CastlePoint Insurance Company will enter into with Tower Insurance Company of New York will require approval of the New York State Insurance Department. In addition, the domiciliary states of any other U.S. licensed insurance companies that we may acquire also may require approval of any pooling agreements they enter into with Tower's insurance companies and any of our other insurance subsidiaries. If Tower acquires subsidiaries that desire to participate in our quota share reinsurance agreements or our pooling agreements, the approval of the domiciliary states of those subsidiaries also may be required.

We have not been present at the meetings that Tower has had with the New York State Insurance Department and the Massachusetts Division of Insurance because we do not own any insurance companies that are directly regulated by those two states. Any amendments to our agreements with Tower will be subject to the approval of our audit committee. We expect that any such amendments and any new agreements we will be entering into with Tower will be completed in the near future.

Any delay in receiving any necessary approvals from, or any further revisions to our agreements with Tower by, the New York State Insurance Department, the Massachusetts Division of Insurance or any other state insurance department may cause a delay in the implementation of our business strategy or cause us to deviate from our business strategy, which would have a material adverse effect on our business, financial condition and results of operation. The disapproval of any of these agreements in their entirety would have a material adverse effect on our business, financial condition and results of operation.

In April 2006 we entered into a master agreement, certain reinsurance agreements, a program management agreement and a service and expense sharing agreement with Tower and/or its subsidiaries. We and Tower have subsequently modified certain of these arrangements as described herein. Under the master agreement as initially executed, we and Tower agreed to cause our respective subsidiaries to enter into certain pooling agreements as soon as practicable after we acquire a U.S. licensed insurance company and required regulatory approvals are obtained. All of these agreements, as well as the warrants we issued to Tower and the employment agreements and compensation arrangements we entered into with Michael H. Lee, Joel S. Weiner, Joseph P. Beitz and James Dulligan, all former managers of Tower with the exception of Mr. Lee, were negotiated while we were a wholly-owned subsidiary of Tower. Although we believe the terms of our agreements with Tower are reasonable and generally consistent with market standards, because we were a wholly-owned subsidiary of Tower when most of the terms of our initial agreements were negotiated with Tower, such terms do not necessarily reflect terms that we or Tower would agree to in arms-length negotiations with an independent third party.

In addition, we plan to meet our financial objectives during the first three years primarily through our relationship with Tower, while gradually developing business opportunities from other distribution sources. Therefore, we are heavily dependent on Tower to achieve our business objectives. In addition, we recently invested $40 million in Tower through our purchase of its non-cumulative convertible perpetual preferred stock. See "Business—Strategic Investments." Due to our close business relationship with Tower, we may be presented with situations involving conflicts of interest with respect to the agreements and other arrangements we entered into, or will enter into, with Tower and its subsidiaries, exposing us to possible claims that we have not acted in the best interest of our shareholders.

Michael H. Lee, the Chairman of the Board and Chief Executive Officer of CastlePoint Holdings, and the Chief Executive Officer of CastlePoint Management, who founded Tower in 1990, holds the positions of Chairman of the Board, President and Chief Executive Officer at Tower and, as such, does not serve our company on a full-time basis. Pursuant to his employment agreement, Mr. Lee is obligated to devote a substantial portion of his attention and time during normal working hours to the business and affairs of CastlePoint Holdings and its affiliates, as well as of Tower and its affiliates. Mr. Lee currently spends approximately 34% of his time on CastlePoint activities, and approximately 66% of his time on Tower activities. Furthermore, Joel S. Weiner, our Chief Financial Officer, Senior Vice President and director; Joseph P. Beitz, President and director of CastlePoint Re; James Dulligan, Vice President and Controller, and director of CastlePoint Management; James Parylak, Vice President and Chief Information Officer of CastlePoint Management; and Richard Weidman, Vice President, Marketing, and director of CastlePoint Management, are all former managers of Tower. Gregory T. Doyle, the President and director of each of CastlePoint Holdings, CastlePoint Management and CastlePoint Insurance Company, and a director of CastlePoint Re, is a former director of Tower.

Because Mr. Lee holds executive management at both Tower and our company, potential conflicts of interest may arise should the interests of Tower, CastlePoint and Mr. Lee diverge. While we expect that initially our interests and Tower's interests should be aligned, they may diverge as we develop

additional business through other distribution sources and become less dependent on Tower, or as we pursue business opportunities with clients that are competitors of Tower.

Mr. Lee's service as Chairman of the Board and Chief Executive Officer of CastlePoint Holdings and as Chairman of the Board, President and Chief Executive Officer of Tower could also raise a potential challenge under anti-trust laws. Section 8 of the Clayton Antitrust Act, or the Clayton Act, prohibits a person from serving as a director or officer in any two competing corporations under certain circumstances. If CastlePoint and Tower are in the future deemed to be competitors within the meaning of the Clayton Act, certain thresholds relating to direct competition between Tower and CastlePoint are met, and the Department of Justice and Federal Trade Commission challenge the arrangement, Mr. Lee may be required to resign his positions with one of the companies, and/or fines or other penalties could be assessed against Mr. Lee and CastlePoint. To alleviate any potential for direct competition between Tower and us, the master agreement will provide, and we expect that the pooling agreements will provide, that Tower will manage the brokerage business pool and CastlePoint will manage the traditional program business pool and the specialty program business pool. This division of responsibilities reflects the different market strategies and focus of our companies. However, it is possible that the potential for direct competition may exist with respect to the business that we pursue with insurance companies other than Tower's insurance companies.

We recently purchased $40 million of non-cumulative convertible perpetual preferred stock of Tower. See "Business—Strategic Investments." Such purchase was approved by our audit committee. Tower has the right to redeem such non-cumulative convertible perpetual preferred stock on the terms and conditions of such perpetual preferred stock. See "Business—Strategic Investments." Tower has indicated to us that it may redeem some or all of its non-cumulative convertible perpetual preferred stock upon an underwritten public offering of common stock and/or a debt offering by Tower that it expects to complete in the near future, if such offerings are successful. If Tower redeems its non-cumulative convertible perpetual preferred stock from CastlePoint Management and we therefore do not acquire common stock of Tower upon conversion of such preferred stock, we continue to believe that investing in Tower in the future is critical to our ongoing success in order to secure a steady source of historically profitable reinsurance business from Tower. Accordingly, we will continue to consider opportunities to invest in Tower as and when the valuation of our shares relative to the valuation of Tower's shares is, in our judgment, prudent so as to justify making such an investment. See also "Business—Strategic Investments."

There is a risk that any strategic investments by us in Tower might increase the perception in the marketplace that the operations of CastlePoint and Tower are intertwined, so that potential customers, who otherwise might be willing to transact business with us, might not do so because of our relationships with Tower. For example, a potential customer may not wish to do business with us if it perceives that it is a competitor of Tower and has a concern that trade secrets and/or other material information might be shared with Tower, even though we believe such concerns are unwarranted due to the procedures we have for keeping information regarding our customers confidential. Accordingly, there is a risk that we might not generate as much business as we otherwise might be able, in light of the various dimensions of our relationship with Tower.

Due to our close business relationship with Tower, and because of Mr. Lee's executive management at both companies, conflicts of interest could arise with respect to business opportunities that could be advantageous to Tower or its subsidiaries, on the one hand, and us or any of our

subsidiaries, on the other hand. For example, both we and Tower may have an opportunity to write a particular program and, depending on whether it is characterized as a traditional program or a specialty program under our agreements with Tower, the economic consequences to us of such determination will be different. Because Tower was our sponsor, is our strategic client and is our largest and most important customer, Tower may have the ability to significantly influence these determinations by us.

Our future capital requirements will depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover our losses. We used approximately $249.2 million in net proceeds we received from the private offering and the $15.0 million Tower invested in us as follows: (1) approximately $250 million to capitalize our indirect reinsurance subsidiary, CastlePoint Re; and (2) approximately $14.4 million to capitalize our intermediate Bermuda holding company, CastlePoint Bermuda Holdings, which directly owns CastlePoint Re. We expect to spend up to $75 million to purchase our U.S. licensed insurance companies, including approximately $8.8 million paid to Tower to acquire CastlePoint Insurance Company, which will permit us to write insurance business in the United States on an admitted and non-admitted basis. Although we do not need to raise the additional funds to operate our business currently or to purchase our U.S. licensed insurance companies, we do expect to need such funds to further grow our business in accordance with our business strategy, which includes supporting our insurance and reinsurance business, as well as making strategic investments, including our recent $40 million investment in Tower. In addition, we may use such funds to make strategic investments in some of our clients, including additional investments in Tower, if any, at some point in the future. In December 2006, we borrowed $100 million, the proceeds of which were used for general corporate purposes, including acquisition and capitalization of CastlePoint Insurance Company and financing of our $40 million investment in Tower's non-cumulative convertible perpetual preferred stock. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Liquidity and Capital Requirements." In the event Tower redeems such stock, we will use the proceeds of such redemption to further capitalize CastlePoint Insurance Company and other U.S. licensed insurance companies that we may acquire. See "Business—Strategic Investments." We expect to use the net proceeds from this offering to further capitalize CastlePoint Re and for general corporate purposes.

We anticipate that any additional funds we raise would be raised through equity and/or additional debt financings. In addition, we may enter into an unsecured revolving credit facility and a term loan facility with one or more syndicates of lenders. We currently have no commitment from any lender with respect to a credit facility or a loan facility. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. If we cannot obtain additional capital, we will not be able to further grow our business and fully implement our business strategy, and our business, results of operations and financial condition would be adversely affected. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Liquidity and Capital Requirements."

Even if we are able to raise capital through equity and/or additional debt financings, as to which there can be no assurance, the interest of existing shareholders in our company may be diluted, and the securities we issue may have rights, preferences and privileges that are senior to those of our common shares or may otherwise materially and adversely effect the holdings or rights of our existing shareholders. For example, the terms of any debt financings that we or one of our subsidiaries may be able to obtain may require compliance with financial covenants, such as a leverage ratio, a consolidated net worth ratio and maintenance of rating, restrictions on the activities of our operating subsidiaries, such as the incurrence of additional indebtedness and liens and the payment of dividends and other payments. Because we are a holding company and have no direct operations, our ability to pay dividends or distributions will depend almost exclusively on the ability of our subsidiaries to pay dividends to us, and such payments will be subject to regulatory, contractual, rating agency and other

constraints. If we cannot receive dividends or other permitted distributions from our operating subsidiaries, or we and/or our subsidiaries are restricted in our operating activities, we may not be able to meet our cash requirements at the holding company level or generate sufficient revenues, which could have a material adverse effect on our business, financial condition and results of operations. In addition, the terms of any debt financings may require guarantees by CastlePoint Holdings or any of our subsidiaries. For example, we may agree to guarantee debt obligations of some of our subsidiaries and, in the event those subsidiaries default on their obligations, we may be unable to make the required payments or timely raise sufficient funds from alternative sources to make the payments, and even if we were able to make such payments, we may not then have sufficient funds to fully implement our business plan, which would adversely affect the value of the holdings of our existing shareholders.

While we recently acquired CastlePoint Insurance Company, our U.S. insurance company that is licensed in the states of New York and New Jersey, we need to obtain additional licenses in other states, either by acquiring other U.S. licensed insurance companies, or by having CastlePoint Insurance Company become more broadly licensed. We also need to make and have approved appropriate rate and form filings for certain lines of business in the states in which we are licensed, in order to begin writing business in those jurisdictions. Through these U.S. licensed insurance companies, we intend to write insurance on an admitted basis, for risks in those U.S. jurisdictions where such companies are licensed. To acquire these U.S. licensed insurance companies or to broaden CastlePoint Insurance Company's licensing to additional states, we generally will need the approval of insurance regulators in the respective states of domicile of such companies, and we will also need the approval of insurance regulators in the states where such companies seek to be admitted or are admitted.

Additionally, CastlePoint Re plans to become eligible to write insurance on a non-admitted basis, as an eligible excess and surplus line insurer, in certain states in the United States. A non-admitted insurer that is eligible to act as an excess and surplus line insurer in a particular state is not licensed as an insurer in such state, but may write insurance business in such state under certain limited circumstances. For example, generally, such business may only be placed with the eligible excess and surplus line insurer through specially licensed insurance brokers, commonly referred to as excess or surplus line brokers. Also, such business generally may only be written by the eligible excess and surplus line insurer if the excess or surplus line broker is unable, after performing a diligent search, to place the coverage with an insurer that is licensed to write such coverage in that state. In certain states, certain kinds or lines of insurance (e.g., workers' compensation) may not be written on an excess and surplus line basis.

Generally, to become eligible to write business on an excess and surplus line basis in certain states in the United States, CastlePoint Re will need the approval of insurance regulators in those states. To obtain such approvals, CastlePoint Re generally will be required to file detailed applications, demonstrate financial stability and establish and maintain a funded trust account. Certain states may require CastlePoint Re to satisfy their seasoning requirements (namely, be required to transact insurance successfully for a certain number of years prior to seeking approval as an excess and surplus line insurer) and the application process may take several months to complete in each jurisdiction. CastlePoint Re expects to file in the near future an application with the Excess Line Association of New York seeking to become eligible to act as an excess and surplus line insurer in New York, and an application to become listed on the National Association of Insurance Commissioners' International Insurers' Department Quarterly Listing of Alien Insurers (the "NAIC List"). In certain states, mere inclusion of an alien insurer on the NAIC List is sufficient for the alien insurer to act as an excess and surplus line insurer in those states. In certain other states, an alien insurer's inclusion on the NAIC List is a prerequisite for the alien insurer to seek to become approved as an eligible excess and surplus line insurer in such states. There is now pending federal legislation which, if adopted in its current form,

would preclude states from prohibiting excess or surplus line brokers from placing non-admitted insurance with, or procuring non-admitted insurance from, alien reinsurers that are included on the NAIC List.

We cannot assure you that we will obtain the necessary regulatory approvals (1) to acquire U.S. licensed insurance companies in addition to CastlePoint Insurance Company, or (2) for CastlePoint Re to act as an eligible non-admitted insurer in one or more states in the United States. Our failure to obtain such regulatory approvals could adversely affect our business plans and our results of operations. Tower's insurance companies are currently managing the brokerage business, while we are managing the traditional program business and the specialty program business and insurance risk-sharing business through CastlePoint Management pursuant to program management agreements, as modified, between CastlePoint Management and Tower Insurance Company of New York and Tower National Insurance Company. CastlePoint Insurance Company will begin issuing policies in each of the states in which it is licensed to transact insurance after it receives any required policy form and rate approvals from the insurance regulatory agencies of each such state. Until we become more broadly authorized to issue policies in the United States, Tower is issuing the policies for the brokerage business, the traditional program business and the specialty program business and insurance risk-sharing business in the states in which we are not authorized to do so. CastlePoint Re entered into three traditional quota share reinsurance agreements with Tower's insurance companies. See "Certain Relationships and Related Transactions—Our Arrangements with Tower and its Subsidiaries—Traditional Quota Share Reinsurance Agreements." However, because our capacity or our ability to otherwise develop our insurance business may be limited if we continue to rely on these reinsurance agreements, we need to acquire more broadly licensed U.S. licensed insurance companies, or have CastlePoint Insurance Company's licensing expanded to additional states, to be able to further grow our insurance business.

We currently derive almost all of our income from our reinsurance business. We anticipate that revenues from our reinsurance business will continue to account for a significant portion of our total revenues and total income, particularly if we do not quickly acquire at least one additional insurance company broadly licensed in the United States or expand CastlePoint Insurance Company's licensing to additional states, in order to conduct our insurance business and insurance risk-sharing business. Neither we nor CastlePoint Re is a U.S. licensed insurer, and consequently we expect to derive a substantial portion of our revenue from reinsuring our share of the traditional program business pool and specialty program business pool that CastlePoint Management will manage, and our share of the brokerage business pool that Tower will manage, during our initial years of operation.

As part of our business, we intend to reinsure a substantial amount of Tower's insurance companies' business. Accordingly, our results of operations are, and will continue to be, highly dependent on the results of operations of Tower's insurance company subsidiaries.

Tower's insurance companies write business in New York, New Jersey and Massachusetts. As a result, a single catastrophe occurrence, destructive weather pattern, terrorist attack, regulatory development or other condition or general economic trend disproportionately affecting the region within which these entities conduct most of their business could have a material adverse affect on such subsidiaries, and therefore, our financial condition or results of operations. Tower has not yet experienced any impact from such an event that materially affected its financial condition or business. The single most significant event of such kind was the September 11 terrorist attacks in New York City. According to Tower's annual report on Form 10-K for the year ended December 31, 2005 as filed with the SEC, Tower's net losses from such event totaled approximately $400,000.

Some of the reinsurance agreements that we entered into with Tower, and the pooling agreements that we plan to enter into with it, may continue for up to four years (as extended by our agreement with Tower from the initial term of three years). To the extent that market conditions change during that period, we will be adversely affected should Tower's underwriting results deteriorate during that period to the extent we are a reinsurer or a pooling partner for that business and cannot exercise our right to cancel such agreements under the early termination provisions that are described under "Certain Relationships and Related Transactions—Our Arrangements with Tower and its Subsidiaries."

We believe that significant market opportunities will arise for reinsurers that understand how to manage primary insurance business and are willing to provide traditional quota share reinsurance as an alternative to finite quota share reinsurance. However, we cannot assure you that the opportunities for traditional quota share reinsurance will materialize as we expect. The market for finite quota share reinsurance is currently in a state of flux. If regulations imposing limitations on the use of finite reinsurance are not implemented and finite quota share insurance remains an attractive product to insurance companies, we may not be able to attract the business we currently anticipate by providing traditional quota share reinsurance. Alternatively, if regulations are adopted that impose limitations on the characterizations of finite quota share reinsurance, other companies might offer traditional quota share reinsurance products on more competitive terms than we can provide. Under these circumstances, we might not be able to expand our traditional quota share reinsurance business beyond our reinsurance agreements with Tower's insurance companies, which would increase our dependence on Tower and have a material adverse effect on our ability to fully implement our business strategy, as well as our financial condition and results of operation.

We reinsure, and intend to insure on a direct basis, property and casualty insurance with large aggregate exposures, corresponding to the possibility of loss, to natural and man-made disasters, such as hurricane, typhoon, windstorm, flood, earthquake, acts of war, acts of terrorism and political instability. We expect that our loss experience generally will include infrequent events of great severity. Although we may attempt to exclude losses from terrorism and other similar risks from some coverages we write, we may not be successful in doing so. The risks associated with natural and man-made disasters are inherently unpredictable, and it is difficult to predict the timing of such events with statistical certainty or estimate the amount of loss any given occurrence will generate. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. The occurrence of losses from catastrophic events may cause a material adverse effect on our ability to write new business, results of operations and financial condition. These losses could eliminate our shareholders' equity and statutory capital and surplus, which is the amount remaining after all liabilities, including loss reserves, are subtracted from all admitted assets, as determined under statutory accounting principles, or SAP. SAP refers to the rules and procedures prescribed or permitted by United States state insurance regulatory authorities, including the NAIC. Increases in the values and geographic concentrations of insured property and the effects of inflation have resulted in increased severity of industry losses in recent years and we expect that those factors will increase the severity of catastrophe losses (which are losses and directly identified loss adjustment expenses from catastrophes) in the future.

The pool managers for each of the brokerage, traditional program and specialty program business pools are required to purchase property and casualty excess of loss reinsurance and property catastrophe excess of loss reinsurance from third party reinsurers to protect the net exposure of the

pool participants. In purchasing the property catastrophe excess of loss reinsurance, the pool manager may retain approximately 10% of the combined surplus of Tower and CastlePoint Insurance Company (referred to as the pooled retention). In addition, with respect to each of the pools, any of the participating companies will have the option to require the pool manager to to increase the pooled retention by an amount up to 10% of CastlePoint Re's surplus provided that CastlePoint Re reinsures this increase to the pooled retention. With respect to the brokerage business pooling agreement, commencing on April 1, 2007, the amount of property catastrophe premiums ceded that will be paid by CastlePoint, through CastlePoint Insurance Company and CastlePoint Re combined will be (1) the total amount of property catastrophe premiums ceded by the brokerage business pool multiplied by CastlePoint Insurance Company's actual pooling percentage, plus (2) to the extent that the total amount ceded to CastlePoint Re and pooled with CastlePoint Insurance Company exceeds 43.75% of Tower Insurance Company of New York's brokerage business premiums, 30% or the total amount, whichever is lesser, of property catastrophe premiums ceded by Tower under the brokerage business pool. For the period commencing on April 1, 2007, the amount of property catastrophe losses incurred that will be incurred by CastlePoint through CastlePoint Insurance Company and CastlePoint Re combined will be (1) the total amount of property catastrophe losses incurred (within the pooled retention) by the brokerage business pool multiplied by CastlePoint Insurance Company's pooling percentage, plus (2) to the extent that the total amount ceded to CastlePoint Re and pooled with CastlePoint Insurance Company exceeds 43.75% of Tower Insurance Company of New York's brokerage business premiums, 30% or the total amount, whichever is lesser, of property catastrophe losses incurred by Tower (within the pooled retention) under the brokerage business pool. The total amount of property catastrophe premiums ceded and the total amount of property catastrophe incurred losses paid by Tower Insurance Company of New York will be the total amount of property catastrophe premiums ceded and incurred losses for the total brokerage business pool less the amounts paid by CastlePoint Insurance Company and CastlePoint Re as described above.

We recently commenced operations and, as a result, we have very limited name recognition or reputation in the insurance or reinsurance industry. Businesses, such as ours, which are in their initial stages of development, present substantial business and financial risks and may suffer significant losses. While we are commencing our operations using senior management who are experienced in the property and casualty insurance industry, no assurance can be given that their relationships in the industry will be successfully transferred to our company. We may also be limited in pursuing certain business opportunities due to our relationship with Tower. Because we intend to support each of our clients, which are primarily insurance companies and program underwriting agents, on a long term basis, we will be careful in accepting new clients who may directly compete with existing clients, such as Tower, for the same products or services in a particular geographic area. For example, because Tower is our largest and most significant customer, and is expected in the future to remain our large and significant customer in the Northeastern United States for the lines and classes of business that Tower underwrites, CastlePoint Re may be limited in the number of additional customers it may accept for those same lines of business and classes in those territories, as such additional customers may be competing with Tower for the opportunity to underwrite the same business. In addition, potential customers may not desire to do business with us because of our close relationship to Tower.

In certain states, CastlePoint Insurance Company's rates (the costs per unit of insurance used in determining the amount of premium to be charged) for certain lines and classes of business may be required to be filed with, and in some cases approved by, each such state's insurance regulatory department. There may be regulatory limitations on the number of such rate filings which CastlePoint Insurance Company, once acquired by us, may make in a given state for a particular line and class of business. Accordingly, it also may be necessary from a regulatory standpoint to limit access to

CastlePoint Insurance Company's rate filings in order to prevent conflicts among program underwriting agents who would otherwise be competing against each other to write CastlePoint Insurance Company's policies using the same rates.

In order to fully implement our business strategy, we need to accomplish many tasks, such as:

In addition, as a result of industry factors, such as excess industry underwriting capacity, new competition and legislative and/or regulatory developments, or factors specific to us, we may have to alter our anticipated methods of conducting our business, such as the nature, amount and types of risks we assume. For example, if a particular type of risk, such as workers' compensation, commercial automobile or construction defects, becomes more volatile or less profitable to insure in a particular geographic area based on one of the industry factors described above, we may cease providing such coverage in such area or provide such coverage to fewer insureds.

Our success depends largely on the senior management of CastlePoint, which includes, among others, Michael H. Lee, the Chairman of the Board and Chief Executive Officer of CastlePoint Holdings and the Chief Executive Officer of CastlePoint Management, Joel S. Weiner, Senior Vice President, Chief Financial Officer and director of CastlePoint Holdings, CastlePoint Re and CastlePoint Management, Gregory T. Doyle, the President and director of each of CastlePoint Holdings, CastlePoint Management and CastlePoint Insurance Company, and a director of CastlePoint Re, and Joseph P. Beitz, President and director of CastlePoint Re. We entered into an employment agreement with Mr. Lee, pursuant to which the initial term of his service continues until July 31, 2009. We also entered into an employment agreement with Mr. Weiner, pursuant to which the initial term of his service continues until April 4, 2007. Further, CastlePoint Re entered into an employment agreement with Mr. Beitz, pursuant to which the initial term of his service continues until May 1, 2007. We are also in the process of completing the terms and conditions of Mr. Doyle's employment agreement with CastlePoint Holdings, and we have preliminarily agreed that the initial term of his service will continue for a period of eighteen months, commencing October 2006. See "Management—Employment Agreements." We do not maintain key man life insurance coverage on the lives of these individuals.

Our business model contemplates a lean staff. As of January 5, 2007, we and our subsidiaries employed a total of 21 employees, 19 of whom were full-time employees. See also "Business—Employees and Administration." We currently have six full-time employees at CastlePoint Re, and over time, we expect that this number will increase to ten full-time employees. We currently have thirteen full-time employees in the United States, and we expect that this number will increase to be between fifteen and twenty full-time employees by the end of our second year of operations.

Since we now have our management team and other personnel in place, our ability to implement our business strategy will depend on their successful integration. Also, we will need additional personnel as we grow. The number of available, qualified personnel in the insurance and reinsurance industry to fill such additional positions may be limited. Our inability to attract and retain executives or the loss of the services of any of our senior executives or key employees, could delay or prevent us from fully implementing our business strategy and could significantly and negatively affect our business. In addition, we cannot assure you that we will successfully integrate our executive or other personnel, as we expand our operations.

Further, we will continue to pursue hiring additional executives or other personnel, individually or in groups, from other companies in the insurance and reinsurance industry to grow our operations. These companies and other competitors may have agreements that restrict those persons and our existing employees from soliciting or hiring their employees and working for competitors and may seek to retain, or prevent us from hiring, their executives and other personnel. We cannot assure you that we will be successful in hiring executives or other personnel, who may be subject to these restrictions, or whose employer seeks to prevent us from hiring them or that we will not incur any liability in connection with our hiring, or attempting to hire, such executives or other personnel.

Competition in the types of insurance business that we intend to underwrite and reinsure is based on many factors, including the perceived financial strength of the insurer and ratings assigned by independent rating agencies. A.M. Best is generally considered to be the most important rating agency in connection with the evaluation of insurance and reinsurance companies by their customers. Generally, the objective of the rating agencies' rating systems is to provide an opinion of an insurer's financial strength and ability to meet ongoing obligations to its policyholders and are not evaluations directed to investors in a company's securities nor recommendations to buy, sell or hold such securities. A.M. Best maintains a letter scale rating system ranging from "A++" (Superior) to "F" (In Liquidation). A.M. Best's ratings are generally based on a quantitative evaluation of a company's performance with respect to profitability, leverage and liquidity and a qualitative evaluation of spread of risk, investments, reinsurance programs, reserves and management. In addition, its ratings take into consideration the fact that we just commenced our operations. Insurance ratings are used by customers, reinsurers and reinsurance intermediaries as an important means of assessing the financial strength and quality of insurers. In addition, the rating of a company seeking reinsurance, also known as a ceding company, may be adversely affected by the lack of a rating of its reinsurer. Therefore, the lack of a satisfactory rating may dissuade a ceding company from reinsuring with us or may influence a ceding company to reinsure with a competitor of ours.

CastlePoint Re has received a Financial Strength rating of "A-" (Excellent) from A.M. Best, which is the fourth highest of fifteen rating levels and indicates A.M. Best's opinion of our financial strength and ability to meet ongoing obligations to our future policyholders. In addition, based on our discussions with A.M. Best, we expect that CastlePoint Insurance Company and any other U.S. licensed insurance companies that we may acquire, upon our acquisition and capitalization of such companies,

will have ratings of "A-" (Excellent) based on our capital funding plans, management experience and relationship with Tower. However, there is no assurance that we will be able to maintain our "A-" (Excellent) rating, or that CastlePoint Insurance Company or any other U.S. licensed insurance companies that we may acquire will receive such rating.

A.M. Best stated that it would closely monitor the flow of business between CastlePoint Re and Tower to ensure there are no material deviations from projections utilized by A.M. Best to establish CastlePoint Re's rating. A.M. Best also stated that it believes CastlePoint Re's results could be impacted by Tower's growth and exposure to catastrophes due to its business concentration in New York City.

The ratings of CastlePoint's reinsurance and insurance subsidiaries are subject to periodic review by, and may be revised downward or revoked at the sole discretion of, A.M. Best. A.M. Best formally evaluates its Financial Strength ratings at least once every twelve months and monitors the performance of rated companies throughout the year. The maintenance of the assigned rating depends upon CastlePoint Re operating in a manner consistent with the business plan presented to A.M. Best. Even if our insurance subsidiaries receive a desired rating, if A.M. Best subsequently downgrades their ratings or CastlePoint Re's current rating below "A-", the competitive position of our reinsurance and insurance subsidiaries would suffer, and their ability to market their products, to obtain customers and to compete in the reinsurance and insurance industry would be adversely affected. A subsequent downgrade, therefore, could result in a substantial loss of business as our insurance company clients and program business managers may move to other insurers with higher claims paying and financial strength ratings.

We intend to grow our business in the future, which could require additional capital, systems development and skilled personnel. CastlePoint Management and CastlePoint Re are actively developing their respective businesses. We expect to develop third party business in our reinsurance and insurance risk-sharing products relatively rapidly over the next two years, especially since, when we commenced our operations, the amount of business we had from clients other than Tower was negligible. While we expect to increase our business from third parties relatively quickly, no assurance can be given that we can do so, and we expect that Tower's business will still remain a very significant portion of our overall business for the foreseeable future. Over a period of several years, we plan to increase the amount of our third party business to approximately 30% or possibly more.

We cannot assure you that we will be able to meet our capital needs, expand our systems effectively, allocate our human resources optimally, identify and hire qualified employees or incorporate effectively the components of any businesses we may acquire in our effort to achieve growth. The failure to manage our growth effectively could have a material adverse effect on our business, financial condition, and results of operations.

We have invested substantially all of the proceeds we received from the private offering in fixed income securities (with approximately $3 million to $5 million to be maintained in cash and short-term investments for general corporate purposes, including working capital), in accordance with our investment guidelines. In addition, we intend to invest the premiums we receive from our reinsurance and insurance underwriting activities in highly rated and liquid fixed income securities, short-term U.S. Treasury bills, cash and money market equivalents. The fair market value of these assets and the investment income from these assets will fluctuate depending on general economic and market conditions. Because we intend to classify substantially all of our invested assets as available for sale, we expect changes in the market value of our securities will be reflected in shareholders' equity. Our board of directors has established our investment policies and our management implements our investment

strategy with the assistance of independent investment managers. We expect our investment portfolio will always include a significant amount of interest rate-sensitive instruments, such as bonds, which may be adversely affected by changes in interest rates. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Because of the unpredictable nature of losses that may arise under reinsurance and insurance policies, our liquidity needs could be substantial and may increase at any time. Increases in interest rates will decrease the value of our investments in fixed-income securities. If increases in interest rates occur during periods when we sell investments to satisfy liquidity needs, we may experience investment losses. If interest rates decline, reinvested funds will earn less than expected.

Our investment results may also be adversely affected by changes in the business, financial condition or results of operations of the entities in which we invest, as well as changes in government monetary policies, and general economic and overall market conditions. Furthermore, general economic conditions and overall market conditions may be adversely affected by U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts.

If we do not structure our investment portfolio so that it is appropriately matched with our insurance and reinsurance liabilities, we may be forced to liquidate investments prior to maturity at a significant loss to cover such liabilities. For this or any of the other reasons discussed above, investment losses could significantly decrease our asset base, which will adversely affect our ability to conduct business. In addition, part of our business strategy includes making strategic investments in insurance companies and program underwriting agents that are or may become our clients. These investments may not be liquid and could increase our investment losses.

Any of these events or changes could have a material adverse effect on our business, financial condition and results of operations.

While CastlePoint Holdings and CastlePoint Re take appropriate measures to attempt to hire qualified Bermudians to work for us, to date all of our key employees are non-Bermudians. Currently, the key employees of CastlePoint Holdings who require work permits to work in Bermuda are Michael H. Lee, its Chairman of the Board and Chief Executive Officer, Gregory T. Doyle, its President, and Joel S. Weiner, its Senior Vice President and Chief Financial Officer. The key employees of CastlePoint Re who require work permits to work in Bermuda are Joseph P. Beitz, President of CastlePoint Re, Timothy Dorr, Vice President, Underwriting—Property, John Barada, Vice President, Underwriting—Casualty, Jennifer Caulder, Vice President—Actuary, and David Lawler, Vice President—Controller.

Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may not engage in any gainful occupation in Bermuda without an appropriate governmental work permit. Work permits may be granted or extended by the Bermuda government upon showing that, after proper public advertisement in most cases, no Bermudian (or spouse of a Bermudian) is available who meets the minimum standard requirements for the advertised position. The Bermuda government's policy limits the duration of work permits to six years, with certain exemptions for key employees and job categories where there is a worldwide shortage of qualified employees. Permanent work permits typically are issued for a term of five years, and temporary work permits are issued for a term of three months and are renewable for an additional three months. Currently, Mr. Weiner has a permanent work permit. Mr. Beitz is working under a temporary work permit that enables him to work in Bermuda, while his permanent work permit is being processed. Messrs. Lee, Doyle, Dorr and Barada have received temporary work permits, and applications for their respective permanent work permits have been made. Permanent work permits for these individuals are expected to be received prior to the expiration date of the temporary permits. In addition, temporary permits have been received for David Lawler,

CastlePoint Re's Vice President and Controller, and Jennifer Caulder, CastlePoint Re's Vice President and Actuary.

Generally, it takes six to twelve weeks to receive approval of an application for a permanent work permit. During the period between the expiration of the extension of the temporary permit and the approval of the permanent permit, the non-Bermudians we hire would be unable to work in Bermuda. We may not be able to use the services of one or more of our key employees if we are not able to obtain work permits for them, which could have a material adverse effect on our business, financial condition and results of operations.

We market our reinsurance products primarily through reinsurance brokers and our insurance products primarily through program underwriting agents. The most significant reinsurance brokers CastlePoint Re and CastlePoint Management are currently working with are Towers Perrin, Aon Re Global, Guy Carpenter & Company, Inc., Benfield Group Ltd., U.S. RE Companies, Inc. and Acordia Re. We have had discussions with other reinsurance brokers and expect that the number of such reinsurance brokers with which we do business will increase over time. However, since there are relatively few reinsurance brokers, we expect that we will derive a significant portion of our reinsurance business from up to twelve such firms. We expect that we will work with one program underwriting agent for every program we have or will develop. We believe that our distribution system does not overlap with that of Tower. While we market our products through reinsurance brokers and program underwriting agents, Tower markets its products and services through retail and wholesale agents and brokers. Tower may purchase reinsurance through reinsurance brokers, but does not market or sell any of its products or services through them.

While we generally rely on the industry relationships and relationships with a number of brokers and program underwriting agents that our senior management team has developed, our failure to further develop or maintain relationships with brokers and program underwriting agents from whom we expect to receive our business could have a material adverse effect on our business, financial condition and results of operations.

In accordance with industry practice, we anticipate that we will frequently pay amounts owed on claims under our insurance or reinsurance contracts to brokers and program underwriting agents, and these brokers and program underwriting agents in turn are required to pay and will pay these amounts over to the clients that have purchased insurance or reinsurance from us. If a broker or a program underwriting agent fails to make such a payment, in a significant majority of business that we write, it is highly likely that we will be liable to the client for the deficiency under local laws or contractual obligations, notwithstanding the broker or program underwriting agent's obligation to make such payment. Likewise, when the client pays premiums for these policies to brokers or program underwriting agents for payment over to us, these premiums are considered to have been paid and, in most cases, the client will no longer be liable to us for those amounts, whether or not we actually receive the premiums from the brokers. Consequently, with respect to most of our insurance and reinsurance business, we will assume a degree of credit risk associated with brokers and program underwriting agents with whom we work.

We compete with a large number of other companies in our selected lines of business. There are many reinsurers throughout the world, and new reinsurance companies, based in Bermuda or

elsewhere, may be formed at any time. We compete with major U.S. and non-U.S. insurers and reinsurers, including several Bermuda-based insurers, that offer the lines of insurance and reinsurance that we offer or will offer, target the same markets as we do and utilize similar business strategies. Unlike most reinsurers, which tend to concentrate on excess of loss and property catastrophe business, our product offerings emphasize proportional reinsurance and risk sharing, although we also offer excess of loss reinsurance, particularly to clients that are also customers or potential customers of our proportional reinsurance and risk sharing products. We compete with various reputable and established reinsurers, such as QBE Insurance Group Limited, PartnerRe Ltd., Max Re Ltd., Munich Reinsurance America Inc. and General Reinsurance Corporation, all of which offer proportional reinsurance. In addition, we face competition from specialty insurance companies, program underwriting agents and intermediaries, as well as diversified financial services companies. In addition, newly formed and existing insurance industry companies have recently raised capital to meet perceived demand in the current environment and address underwriting capacity issues. Other newly formed and existing insurance companies may also be preparing to enter the same market segments in which we compete or in which we expect to raise new capital. Since we have a very limited operating history, many of our competitors have greater name and brand recognition than we have. Many of them also have more (in some cases substantially more) capital and greater marketing and management resources than we have, and may offer a broader range of products and more competitive pricing than we are able to, or will be able to, offer.

Our competitive position is based on many factors, including our perceived financial strength, ratings assigned by independent rating agencies, geographic scope of business, client relationships, premiums charged, contract terms and conditions, products and services offered (including the ability to design customized programs), speed of claims payment, reputation, experience and qualifications of employees and local presence. Since we recently commenced operations, we may not be able to compete successfully on many of these bases. If competition limits our ability to write new business at adequate rates, our return on capital may be adversely affected.

A number of new, proposed or potential legislative developments could further increase competition in our industry. These developments include:

In addition, certain industry developments could also adversely affect our competitive position. These developments include:

New competition from these developments could cause the supply and/or demand for insurance or reinsurance to change, which could affect our ability to price our products at attractive rates and adversely affect our underwriting results.

We are a Bermuda company formed to provide reinsurance and insurance products and services to the property and casualty insurance industry through our wholly-owned operating subsidiaries. Our success depends upon the ability of our underwriters and actuaries to accurately assess the risks associated with the programs and treaties that we insure or reinsure.

In our reinsurance business, we, like other reinsurers, do not separately evaluate each of the individual risks assumed under reinsurance treaties. Thus, we are largely dependent on the original underwriting decisions made by ceding companies. We are subject to the risk that our ceding companies may not have adequately evaluated the individual risks to be reinsured and that the premiums ceded to us may not adequately compensate us for the risks we assume.

In our insurance business, we will underwrite programs in which program underwriting agents will be authorized to exercise underwriting authority on our behalf. While we will provide underwriting guidelines and audit underwriting results, there is no assurance that program underwriting agents will evaluate each of the risks within the program adequately or that the premium charged will be sufficient to compensate us for the underwriting risk insured by us. In addition, we will delegate to program underwriting agents some insurance underwriting activities that are usually handled by the insurance company. No assurance can be given that such program underwriting agents will administer these activities adequately. If they fail to do so, additional underwriting risks may be incurred or regulatory fines may result for which we would be liable.

The location and concentration of business written in New York City and adjacent areas by Tower may expose us to losses from terrorism. U.S. insurers are required by state and Federal law to offer coverage for terrorism in certain commercial lines.

In response to the September 11, 2001 terrorist attacks, the United States Congress enacted legislation designed to ensure, among other things, the availability of insurance coverage for foreign terrorist acts, including the requirement that insurers offer such coverage in certain commercial lines. The Terrorism Risk Insurance Act of 2002 ("TRIA") requires commercial property and casualty insurance companies to offer coverage for certain acts of terrorism and established a Federal assistance program through the end of 2005 to help such insurers cover claims related to future terrorism-related losses. The Terrorism Risk Insurance Extension Act of 2005 ("TRIEA") extends the Federal assistance program through 2007, but it also sets a per-event threshold that must be met before the federal program becomes applicable and also increases the insurers' statutory deductibles, which are, in the case of TRIEA, the amounts of losses that the insurers are required to retain.

Pursuant to TRIA, insurance companies, including Tower's insurance companies, must offer insureds the option to purchase coverage for acts of terrorism that are certified as such by the U.S. Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General, for an additional premium or decline such coverage. When the coverage is not purchased, the policy is endorsed to exclude coverage for certified acts of terrorism, but losses from an act of terrorism that is not a certified event may be covered in any case. Also, even if coverage for certified acts of terrorism is excluded, losses from fire following the act of terrorism are required to be covered in New York and certain other states.

Under TRIA, the Federal government agreed to reimburse commercial insurers for up to 90% of the losses due to certified acts of terrorism in excess of a deductible.

Under TRIEA, the Federal government will reimburse commercial insurers only after a per-event threshold, referred to as the program trigger, has been reached. In the case of certified acts of terrorism taking place after March 31, 2006, the program trigger has been set at $50 million for industry-wide insured losses occurring in 2006 and $100 million for industry-wide insured losses occurring in 2007. The amount of the Federal government's reimbursement drops from 90% to 85% for insured losses in 2007. In addition, each insurer's deductible amount is set at 17.5% of certain of the insurer's direct earned commercial lines premiums for 2006 and 20% for 2007. These changes reduce federal assistance and increase the costs of the terrorism risk insurance program for Tower's insurance companies and other insurers (such as the U.S. licensed insurance companies we own or plan to acquire) subject to TRIA and TRIEA.

Although Tower has informed us that it did not experience any material exposure to losses in connection with the September 11, 2001 terrorist attacks, due to its current concentration of business in New York City, a terrorist attack or series of attacks in New York City or the surrounding areas could have a material adverse effect on our results of operations and financial condition. In addition, terrorist attacks in these areas could depress economic activity in Tower's core market, which could hurt our business. Similarly, the terrorism risk insured by (1) our U.S. licensed insurance companies, and (2) the small insurance companies with whom we expect to share risk, could have a material adverse effect on our results of operations and financial condition.

Pursuant to the reinsurance agreements that CastlePoint Re entered into with Tower's insurance companies and others, CastlePoint Re is required to reinsure a portion of each ceding insurer's losses resulting from terrorism. Although we expect that CastlePoint Re will seek to retrocede some or all of this terrorism risk to unaffiliated reinsurers, it may be unable to do so on terms that it considers favorable, or at all.

We provide reinsurance, and in the future will provide insurance, to our clients and in turn retrocede coverage we assume to other insurers and reinsurers, some of whom may be relatively small agency-owned, association-owned or otherwise privately owned insurers or reinsurers. Some of these insurers or reinsurers to whom we retrocede coverage may be domiciled in Bermuda or other non-U.S. locations. We are subject to credit and other risks that depend upon the financial strength of these reinsurers. Further, we are subject to credit risk with respect to our reinsurance and retrocessional arrangements because the ceding of risk to reinsurers and retrocessionaires does not relieve us of our liability to the clients or companies we insure or reinsure. Our failure to establish adequate reinsurance or retrocessional arrangements or the failure of our reinsurance or retrocessional arrangements to protect us from overly concentrated risk exposure could adversely affect our business, financial condition and results of operation. We attempt to mitigate these risks by retaining collateral or trust

accounts for premium and claims receivables, but nevertheless we cannot be assured that reinsurance will be fully collectable in the case of all potential claims outcomes.

Our subsidiary, CastlePoint Management, has entered into a service and expense sharing agreement with certain of Tower's subsidiaries. Under this agreement, we have access to various insurance company services, such as claims, policy administration and technology services, necessary to conduct our business, as well as to offer these services to our clients. We will rely on such services when conducting our primary insurance operations, which we expect to commence after CastlePoint Insurance Company enters into pooling agreements with Tower's insurance companies. Any other U.S. licensed insurance companies that we may acquire also may enter into pooling agreements with Tower's insurance companies. However, our service and expense sharing agreement has a term of only four years, as extended by our agreement with Tower from the initial term of three years, and we or Tower can terminate this agreement prior to the expiration of its term upon the occurrence of one of the events enumerated under "Certain Relationships and Related Transactions—Our Arrangements with Tower and its Subsidiaries —Service and Expense Sharing Agreements." Should Tower terminate such agreement, fail to renew such agreement, fail to provide such services to us or fulfill any of its other obligations thereunder, we would need to outsource such services, which, due to market conditions or otherwise, may be on less favorable terms and may have an adverse effect on our domestic insurance company business as well as our financial condition and results of operations. Our ability to develop a similar infrastructure internally would take several years and require a significant expenditure in time and expense to hire and train the necessary staff and implement the procedures to provide comparable services. Accordingly, we do not anticipate being able to provide such services internally in the near term.

As industry practices and legal, judicial, social and other environmental conditions change, unexpected issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until some time after we have issued insurance or reinsurance contracts that are affected by the changes. As a result, the full extent of liability under our insurance or reinsurance contracts may not be known for many years after a contract is issued. A recent example of emerging claims and coverage issues is the growing trend of plaintiffs targeting property and casualty insurers in purported class action litigation relating to claims-handling, insurance sales practices and other practices related to the conduct of business in our industry. The effects of this and other unforeseen emerging claim and coverage issues are extremely hard to predict and could have a material adverse effect on our business, financial condition and results of operations.

CastlePoint Holdings is a holding company. As a result, we do not have, and will not have, any significant operations or assets other than our ownership of the shares of our subsidiaries.

Dividends and other permitted distributions from our operating subsidiaries are our sole source of funds to pay dividends to shareholders and meet ongoing cash requirements, including debt service payments, if any, and other expenses. Bermuda law and regulations, including, but not limited to, Bermuda insurance regulations, restrict the declaration and payment of dividends and the making of distributions by CastlePoint Re, unless specific regulatory requirements are met. In addition,

CastlePoint Insurance Company is, and any other U.S. licensed insurance companies that we may acquire will be, subject to significant regulatory restrictions limiting their ability to declare and pay dividends. Furthermore, any dividends paid by CastlePoint Insurance Company or such other U.S. licensed insurance companies will be subject to a 30% withholding tax. Therefore, any dividends or other permitted distributions we expect to receive will likely be paid or otherwise made by CastlePoint Re, which is subject to Bermuda regulatory restrictions and any applicable contractual restrictions on any such payments. If we cannot receive dividends or other permitted distributions from CastlePoint Re as a result of such restrictions, we will be unable to pay dividends as currently contemplated by our board of directors. The inability of our operating subsidiaries to pay dividends in an amount sufficient to enable us to meet our cash requirements at the holding company level could have a material adverse effect on our business, financial condition and results of operations.

We are subject to Bermuda regulatory constraints that affect our ability to pay dividends on our shares and make other payments. Under the Companies Act 1981 of Bermuda (the "Companies Act"), we may declare or pay a dividend out of distributable reserves only if we have reasonable grounds for believing that we are, or would after the payment be, able to pay our liabilities as they become due and if the realizable value of our assets would thereby not be less than the aggregate of our liabilities and issued share capital and share premium accounts. For a discussion of the legal and regulatory limitations on our existing and future subsidiaries' ability to pay dividends to CastlePoint Holdings and of CastlePoint Holdings to pay dividends to its shareholders, see "Regulation—Regulation of CastlePoint Re—Minimum Solvency Margin and Restrictions on Dividends and Distributions" and "Regulation—U.S. Regulation—Regulation of Dividends and other Payments from Insurance Subsidiaries."

We are subject to extensive governmental regulation and supervision. Most insurance regulations are designed to protect the interests of policyholders rather than shareholders and other investors. These regulations, generally administered by a department of insurance in each jurisdiction in which we currently do, or may in the future do, business, relate to, among other things:

Insurance departments also conduct periodic examinations of the affairs of insurance companies and require the filing of annual and other reports relating to financial condition, holding company issues and other matters. These regulatory requirements may adversely affect or inhibit our ability to achieve some or all of our business objectives.

In addition, regulatory authorities have relatively broad discretion to deny or revoke licenses for various reasons, including the violation of regulations. We intend to base some of our practices on our interpretations of regulations or practices that we believe are generally followed by the industry. These practices may turn out to be different from the interpretations of regulatory authorities. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or otherwise penalize us. This could adversely affect our ability to operate our business. Further, changes in the level of regulation of the insurance or reinsurance industry or changes in laws or regulations themselves or interpretations by regulatory authorities could adversely affect our ability to operate our business.

Regulation in the United States. In recent years, the state insurance regulatory framework in the United States has come under increased federal scrutiny, and some state legislatures have considered or enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies. Moreover, the NAIC, which is an association of the senior insurance regulatory officials of all 50 states and the District of Columbia, and state insurance regulators regularly reexamine existing laws and regulations, interpretations of existing laws and the development of new laws, and recommend changes, which may be more restrictive or may result in higher costs to us than current statutory and regulatory requirements.

Regulation in Bermuda. CastlePoint Re has been registered as a Bermuda insurance company and is subject to regulation and supervision in Bermuda. The applicable Bermuda statutes and regulations generally are designed to protect insureds and ceding insurance companies, not our shareholders. CastlePoint Re will not be registered or licensed as an insurance company in any jurisdiction outside Bermuda (except as an approved excess and surplus line insurer), will conduct business through offices in Bermuda and will not maintain an office or conduct any insurance or reinsurance activities in the United States or elsewhere. Inquiries into or challenges to the insurance activities of CastlePoint Re may still be raised in the future.

In the past, there have been congressional and other proposals in the United States regarding increased supervision and regulation of the insurance industry, including proposals to supervise and regulate reinsurers domiciled outside the United States. If CastlePoint Re were to become subject to any insurance laws and regulations of the United States or any U.S. state, which are generally more restrictive than those applicable to it in Bermuda, at any time in the future, it might be required to post deposits or maintain minimum surplus levels and might be prohibited from engaging in lines of business or from writing specified types of policies or contracts. Complying with those laws could have a material adverse effect on our ability to conduct business and on our financial condition and results of operations.

The insurance industry has attracted increased scrutiny by regulatory and law enforcement authorities, as well as class action attorneys and the general public, relating to allegations of improper special payments, price-fixing, bid-rigging, improper accounting practices and other alleged misconduct, including payments made by insurers to brokers and the practices surrounding the placement of insurance business. Formal and informal inquiries have been made of a large segment of the industry, and a number of companies in the insurance industry have received or may receive subpoenas, requests for information from regulatory agencies or other inquiries relating to these and similar matters. These

efforts have resulted in both enforcement actions and proposals for new regulation. Although some of these enforcement actions have been settled, it is difficult to predict the outcome of this increased regulatory scrutiny and whether it will expand into other areas not yet contemplated, whether activities and practices currently thought to be lawful will be characterized as unlawful, what form new regulations will have when finally adopted and the impact, if any, of increased regulatory and law enforcement action and litigation on our business and financial condition when we enter the United States market directly through the U.S. licensed insurance companies we own or acquire in the future.

The insurance and reinsurance industry is undergoing a process of consolidation as industry participants seek to enhance their product and geographic reach, client base, operating efficiency and general market power through merger and acquisition activities. We believe that the larger entities resulting from these mergers and acquisition activities may seek to use the benefits of consolidation, including improved efficiencies and economies of scale, to, among other things, implement price reductions for their products and services to increase their market shares. If competitive pressures compel us to reduce our prices, our operating margins will decrease.

As the insurance and reinsurance industry consolidates, competition may become more intense and the importance of acquiring and properly servicing each customer will become greater. We could incur greater expenses relating to customer acquisition and retention, which could reduce our operating margins.

Currently, there is no established trading market for our shares. Although the shares that were sold to qualified institutional buyers in the private offering are currently eligible for trading among qualified institutional buyers in The Portal Market of the National Association of Securities Dealers, Inc., or NASD, shares sold pursuant to this prospectus will not continue to trade on The Portal Market. We have applied to have our common shares approved for listing on the Nasdaq Global Market under the symbol "CPHL". However, we cannot assure you that an active trading market for the shares will develop. Accordingly, we cannot assure you as to:

If an active trading market does not develop or is not maintained, holders of the shares may experience difficulty in reselling, or an inability to sell, the shares. Future trading prices for the shares may be adversely affected by many factors, including changes in our financial performance, changes in the overall market for similar shares and performance or prospects for companies in our industry.

The initial offering price for our common shares will be determined by agreement among us, the selling shareholders and FBR, and such negotiations will likely be based upon factors that may not be indicative of the future market performance of our common shares after this offering. See "Underwriting." Consequently, the market price of our common shares after this offering may vary substantially from the initial offering price, may be volatile and decline for many reasons, some of which are beyond our control, including among others:

In addition, the stock market in recent years has experienced price and volume fluctuations that often have been unrelated or disproportionate to a company's operating performance. As a result, the trading price of our common shares may fall below the initial public offering price.

Our board of directors currently intends to authorize the payment of an annual cash dividend of $0.10 per common share to our shareholders of record, payable on a quarterly basis. On July 31, 2006, our board of directors authorized the payment of a quarterly dividend of $0.025 per share and a special dividend of $0.025 per share, payable on September 29, 2006 to our shareholders of record as of September 15, 2006. We paid both the quarterly dividend and the special dividend on that date. On October 31, 2006, our board of directors authorized the payment of a quarterly dividend of $0.025 per share, payable on December 29, 2006 to our shareholders of record as of December 15, 2006. Any future determination to pay dividends is at the discretion of our board of directors and is dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory, rating agency and any contractual restrictions on the payment of dividends and any other factors our board of directors deems relevant, including Bermuda and U.S. state legal and regulatory constraints.

Historically, insurers and reinsurers have experienced significant fluctuations in operating results due to competition, frequency of occurrence or severity of catastrophic and other loss events, levels of capacity, general economic and social conditions and other factors. The supply of insurance and reinsurance is related to prevailing prices, the level of insured losses and the level of industry surplus which, in turn, may fluctuate in response to changes in rates of return on investments being earned in the insurance and reinsurance industry. As a result, the insurance and reinsurance industry historically has been cyclical and characterized by periods of intense price competition due to excessive underwriting capacity as well as periods when shortages of capacity permitted favorable premium levels. The supply of insurance and reinsurance may increase, either due to capital provided by new entrants or by the commitment of additional capital by existing insurers or reinsurers, which may cause prices to decrease. Any of these factors could lead to a significant reduction in premium rates and additional competition for business. In addition, our profitability can be affected significantly by:

In addition, the demand for the types of insurance we will offer can vary significantly, rising as the overall level of economic activity increases and falling as that activity decreases, causing our revenues to fluctuate. These fluctuations in results of operations and revenues may cause the price of our securities to be volatile.

Future sales of our common shares by our shareholders or us, or the perception that such sales may occur, could adversely affect the market price of our common shares. Upon the closing of this offering, there will be of our common shares outstanding. This includes shares we are selling in this offering, which may be resold in the public market immediately after this offering. The remaining common shares, representing approximately % of our total outstanding common shares following this offering, will become available for resale in the public market as shown in the chart below. Upon consummation of our initial public offering pursuant to this prospectus, the holders of our common shares that are beneficiaries of the registration rights agreement entered into in connection with the private offering will not be able to sell our common shares for a period of 60 days following the effective date of the registration statement of which this prospectus is a part. Further, upon consummation of our initial public offering pursuant to this prospectus, our directors and executive officers and Tower generally will not be able to sell our common shares for a period of 180 days following the effective date of the registration statement of which this prospectus is a part. An aggregate of shares are subject to these lock-up or market standoff agreements. In addition, we have reserved 1,735,021 shares for issuance under our 2006 long-term equity compensation plan. Under this plan, we have granted options exercisable for, in the aggregate, 1,082,666 of our common shares. In addition, we have issued ten-year warrants to Tower to purchase an additional 1,127,000 of our common shares at an exercise price of $10.00 per share. See "Shares Eligible For Future Sale." Sales of substantial amounts of our shares, or the perception that such sales could occur, could adversely affect the prevailing price of the shares and may make it more difficult for us to sell our equity securities in the future, or for shareholders to sell their shares, at a time and price that they deem appropriate.

The initial price to the public per share will be higher than the net tangible book value per share after giving effect to this offering. As a result, if you purchase shares in this offering, you will suffer an immediate dilution of your investment. Based upon the issuance and sale of common shares at an assumed public price to the public of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will incur immediate dilution of approximately $ in the net tangible book value per share of the common shares you purchase in this offering. In addition, if you purchase shares in this offering, you will pay a price per share that substantially exceeds the price per share paid by Tower, our sponsor. In connection with our formation on November 16, 2005 and capitalization prior to the offering, we issued 2,555,000 of our common shares, representing 100% of our outstanding common shares, to Tower in consideration of its investment of $15.0 million in us. The common shares held by Tower currently represent 8.6% of our outstanding common shares. We also issued ten-year warrants to Tower to purchase an additional 1,127,000 of our common shares at an exercise price of $10.00 per share, which shares represent 3.5% of our common shares outstanding on a fully-diluted basis. The shares held by Tower, together with the shares issuable upon exercise of the Tower warrants, represent 11.6% of our outstanding common shares on a fully-diluted basis. After giving effect to this offering, the common shares held by Tower will represent % of our outstanding common shares ( % if the underwriters' over-allotment option is exercised in full). After giving effect to this offering, the common shares held by Tower, together with the shares issuable upon exercise of the Tower warrants, will represent % of our outstanding common shares on a fully-diluted basis ( % if the underwriters' over-allotment option is exercised in full).

Our ability to comply with applicable laws, rules and regulations is largely dependent on our establishment and maintenance of internal audit and reporting systems, as well as on our ability to attract and retain qualified management, and accounting and actuarial personnel to further develop our internal accounting function and control policies. If we fail to effectively establish and maintain such reporting and accounting systems or fail to attract and retain personnel who are capable of designing and operating such systems, these failures will increase the likelihood that we will become subject to legal and regulatory infractions, including civil litigation and investigations by regulatory agencies including the SEC.

We were formed in November 2005 and have a very limited operating history. Following effectiveness of the registration statement of which this prospectus is a part, we will become subject to new financial and other reporting and corporate governance requirements, including the requirements of the Nasdaq Global Market and certain provisions of the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder, which will impose significant compliance obligations upon us. In particular, we are, or will be, required to:

These obligations require a significant commitment of additional resources. We may not be successful in implementing these requirements, and implementing them could adversely affect our business or operating results. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis would be impaired.

Our bye-laws generally provide that shareholders have one vote for each share held by them and are entitled to vote, on a non-cumulative basis, at all meetings of shareholders. However, pursuant to a mechanism specified in our bye-laws, the voting rights exercisable by a shareholder are limited so that certain persons or groups are not deemed to hold more than 9.5% of the total voting power conferred by our shares. In addition, our board of directors retains certain discretion to make adjustments to the aggregate number of votes attaching to the shares of any shareholder that they consider fair and reasonable in all the circumstances to ensure that no person will hold more than 9.5% of the total voting power represented by our then outstanding shares. Our bye-laws provide generally that any shareholder owning, directly, indirectly or, in the case of any U.S. person, by attribution, more than 9.5% of our common shares will have the voting rights attached to such common shares reduced so that it may not exercise more than 9.5% of the total voting rights. The reduction in votes is generally to be applied proportionately among all shareholders who are members of the first shareholder's control group. A control group means, with respect to any person, all shares directly owned by such person and all shares directly owned by each other shareholder any of whose shares are included in the controlled shares of such person. Controlled shares means all common shares that a person is deemed to own directly, indirectly (within the meaning of Section 958(a) of the Code or, in the case of a U.S. person, constructively (within the meaning of Section 958(b) of the Code). A similar limitation is to be applied to shares held directly by members of a related group. A related group means a group of shareholders that are investment vehicles and are under common control and management. Any reduction in votes will generally be reallocated proportionately among members of the shareholder's control group or related group, as the case may be. The amount of any reduction of votes that occurs by operation of the above limitations will generally be reallocated proportionately among all other of our shareholders who were not members of these groups so long as such reallocation does not cause any person to hold more than 9.5% of the total voting power of our shares.

Under these provisions, some shareholders may have the right to exercise their voting rights limited to less than one vote per share. Moreover, these provisions could have the effect of reducing the voting power of certain shareholders who would not otherwise be subject to the limitation by virtue of their direct share ownership.

As a result of any reduction in the votes of other shareholders, your voting power might increase above 5% of the aggregate voting power of the outstanding shares, which may result in your becoming a reporting person subject to Schedule 13D or 13G filing requirements under the Exchange Act.

We also have the authority to request information from any shareholder for the purpose of determining whether a shareholder's voting rights are to be reallocated pursuant to our bye-laws. If a shareholder fails to respond to a request for information from us or submits incomplete or inaccurate information (after a reasonable cure period) in response to a request, we, in our reasonable discretion, may reduce or eliminate the shareholder's voting rights.

Our bye-laws contain provisions that may entrench directors and make it more difficult for shareholders to replace directors even if the shareholders consider it beneficial to do so. In addition, these provisions could delay or prevent a change of control that a shareholder might consider favorable. For example, these provisions may prevent a shareholder from receiving the benefit from any premium over the market price of our common shares offered by a bidder in a potential takeover. Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common shares if they are viewed as discouraging changes in management and takeover attempts in the future.

Examples of provisions in our bye-laws that could have such an effect include the following:

Provisions of our organizational documents may discourage, delay or prevent a merger, amalgamation, tender offer or other change of control that holders of our shares may consider favorable. These provisions impose various procedural and other requirements that could make it more difficult for shareholders to effect various corporate actions. These provisions could:

The Companies Act, which applies to us, differs in certain material respects from laws generally applicable to U.S. corporations and their shareholders. As a result of these differences, U.S. persons who own our shares may have more difficulty protecting their interests than U.S. persons who own shares of a U.S. corporation. To further understand the risks associated with U.S. persons who own our shares, see "Description of Share Capital—Differences in Corporate Law" for more information on the differences between Bermuda and Delaware corporate laws.

We are incorporated under the laws of Bermuda and our business is based in Bermuda. In addition, some of our directors and officers may reside outside the United States, and all or a substantial portion of our assets will be and the assets of these persons are, and will continue to be, located in jurisdictions outside the United States. As such, it may be difficult or impossible to effect service of process within the United States upon us or those persons or to recover against us or them on judgments of U.S. courts, including judgments predicated upon civil liability provisions of the U.S. federal securities laws. Further, no claim may be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have force of law in Bermuda. A Bermuda court may, however, impose civil liability, including the possibility of monetary damages, on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law.

We have been advised by Conyers Dill & Pearman, our special Bermuda counsel, that there is doubt as to whether the courts of Bermuda would enforce judgments of U.S. courts obtained in actions against us or our directors and officers, as well as the experts named in this prospectus, predicated upon the civil liability provisions of the U.S. federal securities laws or original actions brought in Bermuda against us or these persons predicated solely upon U.S. federal securities laws. Further, we have been advised by Conyers Dill & Pearman that there is no treaty in effect between the United States and Bermuda providing for the enforcement of judgments of U.S. courts, and there are grounds upon which Bermuda courts may not enforce judgments of U.S. courts. Some remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities laws, may not be allowed in Bermuda courts as contrary to that jurisdiction's public policy. Because judgments of U.S. courts are not automatically enforceable in Bermuda, it may be difficult for you to recover against us based upon such judgments.

Our bye-laws provide that we have the option, but not the obligation, to require a shareholder to sell its shares at a purchase price equal to their fair market value to us, to other shareholders or to third parties if we determine, based on the written advice of legal counsel, that failure to exercise this option would result in adverse tax, regulatory or legal consequences to us or some U.S. persons as to which the shares held by such shareholder constitute controlled shares. In the latter case, our right to require a shareholder to sell its shares to us will be limited to the purchase of a number of shares that will permit avoidance of those adverse tax consequences. See "Description of Share Capital—Bye-laws."

CastlePoint Holdings, CastlePoint Bermuda Holdings and CastlePoint Re are Bermuda exempted companies, which means, in general, that they are companies that do not carry on their business activities in Bermuda, are formed for the purpose of conducting business outside Bermuda from a place of business in Bermuda, and are exempted from the Companies Act requirements relating to Bermudian ownership. We intend to manage our business so that neither CastlePoint Holdings nor CastlePoint Bermuda Holdings will be treated as engaged in a trade or business within the United States and CastlePoint Re will not be treated as doing business through a permanent establishment in the United States and, as a result, none will be subject to U.S. tax (other than U.S. excise tax on insurance and reinsurance premium income attributable to insuring or reinsuring U.S. risks and U.S. withholding tax on certain U.S. source investment income). The determination of whether a company is engaged in a trade or business within the United States, or doing business through a permanent establishment in the United States, is an annual determination based upon facts and circumstances during that year. There is little guidance either in the statutes, treatises or case law, on the factors to be used in making that determination, or on the relative weight to be given to those factors. Because there is considerable uncertainty as to what activities constitute being engaged in a trade or business within the United States or doing business through a permanent establishment in the United States, and because a significant portion of CastlePoint Re's business is, and is expected to continue to be, reinsurance of Tower, whose Chairman of the Board, President and Chief Executive Officer is also the Chairman of the Board and Chief Executive Officer of CastlePoint Holdings, we cannot be certain that the IRS will not be able to successfully contend that CastlePoint Holdings or CastlePoint Bermuda Holdings is engaged in a trade or business in the United States or that CastlePoint Re is doing business through a permanent establishment in the United States. In the event that CastlePoint Holdings or CastlePoint Bermuda Holdings, as the case may be, were considered to be engaged in a business within the United States, CastlePoint Holdings would be subject to U.S. corporate income and branch profits taxes on the portion of its earnings effectively connected to such U.S. business; if CastlePoint Re were considered to be doing business through a permanent establishment in the United States, CastlePoint Re would be subject to U.S. income and branch profits tax on the portion of its income attributable to that permanent establishment. Either of these outcomes could have a material adverse effect on our business, financial condition and results of operations.

One or more of our U.S. subsidiaries might be subject to additional U.S. tax on a portion of their income if they are considered a personal holding company, or PHC, for U.S. federal income tax purposes. This status will depend on whether more than 50% of our shares by value could be deemed to be owned (taking into account indirect and constructive ownership) by five or fewer individuals and whether 60% (50% after the first year in which a corporation is a PHC) or more of such subsidiary's adjusted ordinary gross income consists of "personal holding company income," which is, in general, certain forms of passive and investment income. Based upon information made available to us regarding our expected shareholder base, we believe that the U.S. subsidiaries we expect to acquire should not be considered a PHC. Additionally, we intend to manage our business to minimize the possibility that we will meet the 60% income threshold. However, because of the lack of complete information regarding our ultimate share ownership (i.e., as determined by the constructive ownership rules for PHCs), we cannot assure you that one or more of our U.S. subsidiaries will not be considered a PHC or that the amount of U.S. tax that would be imposed if it were not the case would be immaterial. See "Material Tax Considerations—Certain U.S. Federal Income Tax Considerations—U.S.

Taxation of CastlePoint Holdings, CastlePoint Bermuda Holdings, CastlePoint Re, CastlePoint Management and U.S. Licensed Insurers—Personal Holding Companies."

The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966, as amended, of Bermuda, has given each of CastlePoint Holdings, CastlePoint Re and CastlePoint Bermuda Holdings an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax will not be applicable to CastlePoint Holdings, CastlePoint Re, CastlePoint Bermuda Holdings or any of their respective operations, shares, debentures or other obligations until March 28, 2016. See "Material Tax Considerations—Certain Bermuda Tax Considerations." Given the limited duration of the Minister of Finance's assurance, we cannot be certain that we will not be subject to any Bermuda tax after March 28, 2016. In the event that we become subject to any Bermuda tax after such date, it would have a material adverse effect on our financial condition and results of operations.

Each "10% U.S. Shareholder" of a foreign corporation that is a CFC for an uninterrupted period of 30 days or more during a taxable year, and that owns shares in the CFC directly or indirectly through foreign entities on the last day of the corporation's taxable year on which such corporation was a CFC, must include in its gross income for U.S. federal income tax purposes its pro rata share of the CFC's "subpart F income," even if the subpart F income is not distributed. Subpart F income generally includes, among other things, investment income such as dividends, interest and capital gains, and income from insuring risks located outside the insurer's country of incorporation. A foreign corporation is considered a CFC if "10% U.S. Shareholders" own more than 50% of the total combined voting power of all classes of voting stock of the foreign corporation, or more than 50% of the total value of all stock of the corporation. A 10% U.S. Shareholder is a U.S. person, as defined in the Code, that owns at least 10% of the total combined voting power of all classes of stock entitled to vote of the foreign corporation. For purposes of taking into account subpart F income consisting of insurance income, a CFC also includes a foreign corporation of which more than 25% of the total combined voting power of all classes of stock (or more than 25% of the total value of the stock) is owned by 10% U.S. Shareholders, on any day during the taxable year of such corporation, if the gross amount of premiums or other consideration for the reinsurance or the issuing of insurance or annuity contracts which do not produce exempt insurance income as defined in Section 953(e) of the Code exceeds 75% of the gross amount of premium or other consideration in respect of all risks. It is expected that all of CastlePoint Re's income will be considered subpart F insurance income. For purposes of determining whether the more-than-50% (or more-than-25%, in the case of insurance income) and 10% ownership tests have been satisfied, and therefore whether a corporation is a CFC, shares owned includes shares owned directly or indirectly through foreign entities or shares considered owned under constructive ownership rules. The attribution rules are complicated and depend on the particular facts relating to each investor.

CastlePoint Holdings' bye-laws contain provisions that impose limitations on the concentration of voting power of its shares, that authorize the board to purchase its shares under specified circumstances and that address the voting of foreign subsidiaries' shares. Accordingly, based upon these provisions and information we have about our expected shareholder base, we do not believe that any U.S. person that owns shares in CastlePoint Holdings directly or indirectly through foreign entities should be subject to treatment after the offering as a 10% U.S. Shareholder of a CFC. It is possible, however, that the

IRS could challenge the effectiveness of these provisions and that a court could sustain such a challenge.

In general, a foreign corporation will be considered a PFIC during a given year if (1) 75% or more of its gross income constitutes "passive income" or (2) 50% or more of its assets produce passive income or are held for the production of passive income. For these purposes, passive income generally includes interest, dividends, annuities and other investment income. The PFIC statutory provisions contain an express exception for income derived in the active conduct of an insurance business by a corporation that is predominantly engaged in the insurance business. We do not intend to conduct our activities in a manner that would cause us to become a PFIC. However, it is possible that we could be deemed a PFIC by the Internal Revenue Service (the "IRS") for 2006 or any future year. If we were considered a PFIC, it could have material adverse tax consequences for an investor that is subject to U.S. federal income taxation, including subjecting the investor to a greater tax liability than might otherwise apply or subjecting the investor to tax on amounts in advance of when tax would otherwise be imposed. There are currently no regulations regarding the application of the PFIC provisions to an insurance company. New regulations or pronouncements interpreting or clarifying these rules may be issued in the future. We cannot predict what impact, if any, this guidance would have on a shareholder that is subject to U.S. federal income taxation. We have not sought and do not intend to seek an opinion of legal counsel as to whether or not we are a PFIC for the year ended December 31, 2006 or any subsequent year.

The IRS, in Revenue Ruling 2005-40, took the position that a transaction between an insurer and an insured did not provide risk distribution, and thus was not insurance for U.S. federal income tax purposes, when the insured provided over 90% of the insurer's premiums for the year. The IRS has never taken this position with respect to quota share reinsurance transactions in which the ceding company cedes a significant number of unrelated risks to the reinsurer, even if the ceding company provided substantially all of the reinsurer's business. Nevertheless, if the IRS successfully advocated such a position, and transactions between Tower and CastlePoint Re and/or the U.S. licensed insurance companies we intend to acquire were not considered insurance, CastlePoint could be considered a PFIC. As noted above, if CastlePoint were considered a PFIC, that could have material adverse tax consequences for an investor that is subject to U.S. tax.

then a U.S. person who owns any shares in CastlePoint Holdings directly or indirectly through foreign entities on the last day of CastlePoint Re's taxable year on which it is a CFC would be required to include in its income for U.S. federal income tax purposes the shareholder's pro rata share of CastlePoint Re's RPII for the U.S. person's taxable year that includes the end of CastlePoint Re's taxable year determined as if such RPII were distributed proportionately to such U.S. shareholders at that date regardless of whether such income is distributed. In addition any RPII that is includible in the income of a U.S. tax-exempt organization will be treated as unrelated business taxable income. The amount of RPII earned by CastlePoint Re (generally, premium and related investment income from the direct or indirect insurance or reinsurance of any direct or indirect U.S. shareholder of CastlePoint Re or any person related to such shareholder) will depend on a number of factors, including the identity of persons directly or indirectly insured or reinsured by CastlePoint Re. We do not expect that ownership of CastlePoint Re's shares by direct or indirect insureds and related persons will equal or exceed 20% of the voting power or value of the shares of CastlePoint Re. Because we expect U.S. persons to own in the aggregate 25% or more of the stock of CastlePoint Re by vote and value and our gross RPII to exceed 20% of our gross insurance income, only the exception for less than 20% ownership by direct and indirect insureds and their related persons, described above, is potentially available to CastlePoint Re. We intend to request information from insureds in order to ensure that the 20% ownership exception is met. Tower, which owns approximately 8.6% of our outstanding common shares as a result of its $15.0 million investment in us, will be an insured, and CastlePoint will not always be able to tell who all of its shareholders or direct or indirect insureds are. Accordingly, it is possible that the IRS will assert that 20% or more of the vote or value of the shares of CastlePoint Re are owned by insureds of CastlePoint Re or their related persons, and that CastlePoint will be unable to prove otherwise.

The RPII rules provide that if a shareholder that is a U.S. person disposes of shares in a foreign insurance corporation that has RPII (even if the amount of RPII is less than 20% of the corporation's gross insurance income or the ownership of its shares by direct or indirect insureds and related persons is less than the 20% threshold) and in which U.S. persons own 25% or more of the shares, any gain from the disposition will generally be treated as ordinary income to the extent of the shareholder's share of the corporation's undistributed earnings and profits that were accumulated during the period that the shareholder owned the shares (whether or not such earnings and profits are attributable to RPII). In addition, such a shareholder will be required to comply with reporting requirements, regardless of the amount of shares owned by the shareholder. We believe that these rules should not apply to dispositions of our shares because CastlePoint will not itself be directly engaged in the insurance business and because proposed U.S. Treasury regulations appear to apply only in the case of shares of corporations that are directly engaged in the insurance business. However, the IRS might interpret the proposed regulations in a different manner and the applicable proposed regulations may be promulgated in final form in a manner that would cause these rules to apply to dispositions of our shares.

The U.S. federal income tax laws and interpretations, including those regarding whether a company is engaged in a trade or business within the United States or is doing business through a permanent establishment in the United States, or whether a company is a PFIC or whether U.S. persons would be required to include in their gross income the subpart F income or the RPII of a CFC are subject to change, possibly on a retroactive basis. There are currently no regulations regarding the application of the PFIC rules to insurance companies and the regulations regarding RPII are still in proposed form. New regulations or pronouncements interpreting or clarifying these or other U.S. tax rules may be issued in the future. We cannot be certain if, when or in what form such regulations or pronouncements may be provided and whether such regulations or guidance will have a retroactive effect.

Some of the statements in "Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Industry Background," "Business," "Regulation," "Management" and elsewhere in this prospectus, including those using words such as "believes," "expects," "intends," "estimates," "projects," "predicts," "assumes," "anticipates," "plans" and "seeks," and comparable terms, are forward-looking statements. Forward-looking statements are not statements of historical fact and reflect our views and assumptions as of the date of this prospectus regarding future events and operating performance. Because we have a very limited operating history, many statements relating to us and our business, including statements relating to our competitive strengths and business strategies, are forward-looking statements.

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to those described under "Risk Factors", including the following:

This list of factors is not exhaustive and should be read with the other cautionary statements that are included in this prospectus.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from our projections. Any forward-looking statements you read in this prospectus reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to, among other things, our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this prospectus that could cause actual results to differ from those discussed in the forward-looking statements before making an investment decision. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future events or otherwise.

Prior to the date of this prospectus, our common shares have not been listed or quoted on any national exchange or market system and there is no established public trading market for our common shares. However, following the closing of the private offering, our common shares have been sold from time to time in private transactions. Some of those sales by certain qualified institutional buyers of our common shares in the private offering have been reported on The Portal Market, which facilitates the resale of unregistered securities under Rule 144A of the Securities Act among qualified institutional buyers.

While our common shares have been sold privately from time to time after the closing of the private offering, and some of these trades have been reported on The Portal Market, this information is not complete because broker-dealers are not obligated to report all trades to Portal. Shares sold pursuant to this prospectus will not continue to trade on The Portal Market.

We have applied to have our common shares approved for listing on the Nasdaq Global Market under the symbol "CPHL." Future prices of our common shares will likely vary from the sale price per share set forth above, and such price may not be indicative of the prices at which our common shares will be quoted on the Nasdaq Global Market.

As of January 5, 2007, we had 29,580,000 common shares issued and outstanding, which were held by two holders of record, Cede & Co. and Tower. Cede & Co. holds shares on behalf of The Depository Trust Company, which itself holds shares on behalf of 387 beneficial owners of our common shares, as of December 29, 2006.

We estimate that we will receive net proceeds from this offering of approximately $ million, based on an assumed initial offering price of $ , which is the midpoint of the price range set forth on the cover page of this prospectus, and after the payment of the underwriters' discounts and commissions and our payment of the expenses of this offering estimated to be $ . A $1.00 increase (or decrease) in the assumed initial public offering price of $ , which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (or decrease) net proceeds to us from this offering by $ , assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions. We intend to use these net proceeds to further capitalize CastlePoint Re, and for general corporate purposes. We will not receive any of the proceeds from the sale of common shares by the selling shareholders.

CastlePoint Holdings is a holding company and has no direct operations. The ability of CastlePoint Holdings to pay dividends or distributions depends almost exclusively on the ability of its subsidiaries to pay dividends to CastlePoint Holdings, and will be subject to regulatory, contractual, rating agencies and other constraints. Under Bermuda law, CastlePoint Bermuda Holdings and CastlePoint Re may not declare or pay a dividend if there are reasonable grounds for believing that either company is, or would after the payment be, unable to pay its liabilities as they become due, or the realizable value of either company's assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts. Further, CastlePoint Re, as a regulated insurance company in Bermuda, is subject to additional regulatory restrictions on the payment of dividends or other distributions. Under the terms of the reinsurance agreements between CastlePoint Re and Tower's insurance companies, CastlePoint Re is required to provide security to Tower's insurance companies to support reinsurance recoverables owed to these reinsureds. We may also be required by other clients to provide similar security as part of our reinsurance business. In addition, CastlePoint Insurance Company is, and any U.S. licensed insurance companies that we may acquire will be, subject to significant regulatory restrictions limiting their ability to declare and pay dividends. Furthermore, any dividends paid by CastlePoint Insurance Company and such other U.S. licensed insurance companies we may acquire will be subject to a 30% withholding tax. For a further description of the restrictions on the ability of our subsidiaries to pay dividends, see "Risk Factors—Risks Related to Our Business—Our holding company structure and certain regulatory and other constraints affect our ability to pay dividends and make other payments", "Regulation—Regulation of CastlePoint Re—Minimum Solvency Margin and Restrictions on Dividends and Distributions" and "Regulation—U.S. Regulation—Regulation of Dividends and other Payments from Insurance Subsidiaries."

You should read the following table in conjunction with the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our unaudited consolidated financial statements as of and for the periods ended September 30, 2006 and related notes included in this prospectus.

		As of September 30, 2006
		Actual		Pro Forma(2)
		(Unaudited)
Debt		$	0	$
Shareholders' equity:
Common shares, $0.01 par value per share, 100,000,000 shares authorized; 29,580,000 common shares issued and outstanding on an actual basis, and common shares issued and outstanding on a pro forma basis			295,800
Additional paid-in capital(1)			269,139,708
Accumulated other comprehensive income			2,130,736
Retained earnings (deficit)(1)			2,257,943

	Total shareholders' equity	$	273,824,187	$

Total capitalization		$	273,824,187	$

If you purchase common shares in this offering, your investment in us will be diluted because the price you will pay for one share will exceed the net tangible book value per share immediately subsequent to this offering. Our net tangible book value as of September 30, 2006 was $ million, or $ per share. Our pro forma net tangible book value as of September 30, 2006 was $ million, or approximately $ per share. This amount reflects our initial capitalization, and gives effect to the issuance in this offering of common shares at an assumed initial price to the public of $ per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and the application of our estimated net proceeds from this offering, and after the deduction of underwriting discounts and commissions and our estimated offering expenses. Pro forma net tangible book value represents an immediate increase in net tangible book value of $ per share to our shareholders and an immediate dilution of $ per share to investors purchasing shares in this offering at an assumed initial price to the public of $ per share, which is the mid-point of the price range set forth on the cover page of this prospectus. The following table illustrates this per share dilution:

Assumed initial price to the public per share			$
	Net tangible book value per share as of September 30, 2006	$
	Increase per share attributable to investors in this offering	$

Pro forma net tangible book value per share after this offering		$

Dilution per share to new investors		$

The following table summarizes, as of September 30, 2006, on the pro forma basis described above, the differences between Tower and our other existing shareholders and the investors purchasing shares in this offering with respect to the number of shares purchased in this offering, the total consideration paid and the average price per share paid by our existing shareholders and our new investors, after giving effect to the issuance of common shares in this offering at an assumed initial price to the public of $ per share, which is the mid-point of the price range set forth on the cover page of this prospectus. A $1.00 increase (or decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (or decrease) the total consideration paid by new investors and the average price per share paid by Tower, other existing shareholders and new investors in the offering by $ , $ , $ and $ , respectively, in each case assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and our estimated offering expenses.

The following table sets forth our selected historical financial information for the periods ended and as of the dates indicated. The historical results are not necessarily indicative of results to be expected in any future period. This financial information is derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. You should read the following selected historical financial information in conjunction with the information contained in this prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this prospectus. Many factors may cause our future results to differ materially from the financial information and results presented below, including those factors discussed in "Risk Factors."

		Inception to September 30, 2006 (Unaudited)
CastlePoint Holdings Selected Consolidated Financial Information
Assumed premium written		$	116,408,119
Premium ceded			—

Net premium written		$	116,408,119

Net earned premium		$	47,390,299
Commission income			1,392,394
Net investment income			6,696,131
Net realized gains			9,847

	Total revenues		55,488,671
Loss and loss adjustment expenses			25,297,308
Commission expense			17,420,755
Operating expense			9,033,665

	Total expenses		51,751,728
Income before income taxes			3,736,943
Income tax expense (benefit)			—

Net income		$	3,736,943

Net income available to common shareholders		$	3,736,943

Per Share Data:
Basic earnings per share		$	0.22
Diluted earnings per share		$	0.22
Basic weighted average shares outstanding			17,075,431
Diluted weighted average shares outstanding			17,075,431
Selected ratios (based on U.S. GAAP statement of reinsurance segment)
Net loss ratio(1)			53.4	%
Net expense ratio(2)			35.7	%

Net combined ratio(3)			89.1	%
Summary Balance Sheet Data
Total investments and cash and cash equivalents		$	309,639,336
Premium receivable			33,155,096
Deferred acquisition costs			24,200,269

Total assets		370,833,698
Loss and loss adjustment expense reserves		22,229,875
Unearned premium		69,017,820
Total shareholders' equity		273,824,187
Per Share Data
Book value per share(4)	$	9.26
Diluted book value per share(5)	$	9.19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

We were incorporated in November 2005, and commenced operations in April 2006, as a new Bermuda holding company organized to provide insurance and reinsurance business solutions, products and services to the property and casualty insurance industry through our subsidiaries. Our reinsurance solutions primarily include traditional quota share, as well as, on a limited basis, property and casualty per risk excess of loss, property catastrophe excess of loss, aggregate excess of loss and property surplus share reinsurance. Our insurance solutions will include pooling arrangements with other insurance companies or appointing insurance companies as our program underwriting agents to provide them with additional underwriting capacity and access to the higher rating and expanded licensing that we may have through CastlePoint Insurance Company and any other U.S. insurance companies we acquire. We also plan to provide comprehensive business solutions to program underwriting agents in the United States, including policy issuance capability through our insurance companies, assumption of underwriting risk and the ability to participate in underwriting risk by providing alternative risk transfer capabilities. As a part of our insurance and reinsurance business solutions, we plan to offer broad lines of business, including commercial package, fire and allied lines, commercial general liability, workers' compensation, homeowners and personal dwellings, professional liability, commercial and personal inland marine and commercial and personal automobile. We also plan to offer a comprehensive set of insurance company services which can be purchased separately from our product offerings on an unbundled basis, including claims handling, policy administration and insurance technology solutions.

We offer these products through our operating subsidiaries domiciled in Bermuda and in the United States. We offer our reinsurance products and will offer insurance risk-sharing products to Tower and its subsidiaries as well as to small insurance companies located in the United States with surplus of less than $100 million. We also plan to conduct business with other insurance companies that are seeking to efficiently manage their capital as well as limit their concentration of risk in certain geographic areas through our insurance risk sharing and traditional quota share reinsurance solutions. In addition, we will offer our insurance and unbundled insurance company services to program underwriting agents located in the United States. We may make strategic investments in some of our clients, including Tower. We recently purchased $40 million of non-cumulative convertible perpetual preferred stock of Tower, and we may make additional investments in Tower at some point in the future. See "Business—Strategic Investments."

Our relationship with Tower and its subsidiaries, including the master agreement and other agreements we entered into, or plan to enter into, with such companies, is described under "Business—Our Strategic Relationship With Tower" and "Certain Relationships and Related Transactions—Our Arrangements with Tower and its Subsidiaries" in this prospectus. See also "—Outlook." Our program management agreements, pooling agreements and service and expense sharing agreements with Tower and its subsidiaries are subject to modification by the New York State Insurance Department. Further, all of our agreements with Tower National Insurance Company are subject to review and modification by the Massachusetts Division of Insurance. See "Risk Factors—Our agreements with Tower's insurance

companies are subject to regulatory review and may be changed, which would have a material adverse effect on our business, financial condition and results of operations" and "Certain Relationships and Related Transactions—Master Agreement—Status of Regulatory Approvals."

Effective as of July 1, 2006, and for the period continuing through December 31, 2006, we and Tower changed the amount of reinsurance business Tower ceded to CastlePoint Re to 40% (from 30%, which was in effect for the three months ended June 30, 2006) under the brokerage business quota share reinsurance agreement, and to 50% (from 30%, which was in effect for the three months ended June 30, 2006) under the traditional program business quota share reinsurance agreement. Tower currently cedes 85% of the specialty program business and insurance risk-sharing business to CastlePoint Re through the related quota share reinsurance agreement.

Tower indicated to us that its desire to increase the amounts ceded by Tower to CastlePoint Re to 40% from 30% under the brokerage business quota share reinsurance agreement was due in part to the fact that we had not yet acquired a U.S. licensed insurance company and therefore, to date, we have not been able to enter into pooling agreements with Tower's insurance companies. If the brokerage pooling agreement with Tower were in effect for the period commencing July 1, 2006, Tower would have ceded a minimum of 25% of its brokerage business to our U.S. licensed insurance companies under the related pooling agreement and would have ceded 25% of the remaining 75% of such business to CastlePoint Re under the brokerage business quota share reinsurance agreement. Therefore, a total of 43.75% of Tower's brokerage business would have been either pooled or ceded to the insurance and reinsurance subsidiaries of CastlePoint Holdings.

We expect that the pooling agreements CastlePoint Insurance Company will enter into with Tower Insurance Company of New York will be effective January 1, 2007. For 2007, the brokerage business pooling percentage initially ceded to CastlePoint Insurance Company will be 15% and the brokerage business quota share reinsurance percentage initially ceded to CastlePoint Re will be 40%. While the pooling percentage of 15% is below the minimum percentage provided by our master agreement with Tower, we have agreed to the 15% pooling percentage for 2007 because, together with the 40% quota share reinsurance percentage, the total amount of brokerage business that will be ceded to us will be approximately 49% for 2007, which is in excess of the 40% percentage shared with us under the brokerage business quota share reinsurance agreement for the six months ended December 31, 2006.

We believe that the key factors that are likely to impact Tower's future revenues and underwriting results are its ability to grow its direct premiums written through its existing brokerage distribution network, its ability to expand its brokerage distribution to new territories and its ability to make acquisitions, such as Tower's proposed acquisition of Preserver. These factors in turn impact the magnitude and profitability of the business pooled with CastlePoint Insurance Company and ceded to CastlePoint Re.

We will also underwrite reinsurance contracts with primary insurance companies other than Tower, insurance policies written under pooling or other risk sharing agreements with insurance companies other than Tower, and premiums produced by program underwriting agents.

We will report our business in three segments: insurance, reinsurance and insurance services. The insurance segment will include the results of CastlePoint Insurance Company and any other U.S. licensed insurance companies that we may acquire and CastlePoint Re for excess and surplus lines written on a primary basis. The reinsurance segment includes the results from the reinsurance business written through CastlePoint Re. Our insurance services segment will include the results from managing the specialty program business and insurance risk-sharing business through CastlePoint Management, as well as results from providing our unbundled insurance services to program underwriting agents.

We derive our revenue from net premiums earned, ceding commission revenues, direct commission revenue and fees, net investment income and net realized gains and losses on investments.

Net premiums earned. Premiums written include all premiums received by an insurance company during a specified accounting period, even if the policy provides coverage beyond the end of the period. Premiums are earned over the term of the related policies. At the end of each accounting period, the portion of the premiums that are not yet earned are included in the unearned premium reserve and are realized as revenue in subsequent periods over the remaining term of the policy. Our policies typically have a term of twelve months. Thus, for example, for a policy that is written on July 1, 2005, one-half of the premiums would be earned in 2005 and the other half would be earned in 2006.

Net premiums earned are the earned portion of our net premiums written. Net premiums written are gross premiums written less premiums ceded to reinsurers in connection with reinsurance agreements or to participating insurance companies in connection with pooling agreements. Our gross premiums (written and earned) are the sum of both direct premiums from our insurance segment and assumed premiums from our reinsurance segment. Throughout this prospectus, direct and assumed premiums (written or earned) separately or together are also referred to as gross premiums.

Premiums written in CastlePoint Re are expected to consist of premiums assumed under reinsurance agreements with Tower, premiums assumed from the U.S. licensed insurance companies we expect to acquire, premiums assumed from other unrelated insurance and reinsurance companies, and non-admitted insurance premiums written on a direct basis by CastlePoint Re.

Premiums written in the U.S. licensed insurance companies we own or plan to acquire are expected to consist of premiums written under the pooling or other risk sharing agreements with Tower or other insurance companies and premiums produced through program underwriting agents. Such premiums written will be earned over the term of the underlying policies, typically twelve months.

Ceding commission revenues. We will earn ceding commission revenues on any gross premiums written that we cede to reinsurers in connection with reinsurance agreements or to participating insurance companies in connection with pooling agreements.

Direct commission revenues and fees. Direct commission revenues and fees consist of commissions earned by CastlePoint Management on premiums produced by the specialty program business and insurance risk-sharing business that it manages and fees earned from its unbundled services provided to program underwriting agents.

Net investment income and net realized gains and losses on investments. We invest our statutory capital and surplus and the funds supporting our insurance reserves (including unearned premium reserve and the reserves established to pay for losses and loss adjustment expenses) in investment securities and cash equivalents. Our investment income includes interest and dividends earned on our invested assets. Realized gains and losses on invested assets are reported separately from net investment income. We recognize realized gains when invested assets are sold for an amount greater than their amortized cost in the case of fixed maturity securities and cost in the case of equities and recognize realized losses when invested assets are written down or sold for an amount less than their amortized cost or cost, as applicable.

amortized cost or cost, as appropriate. In evaluating potential impairment, we consider, among other criteria: the current fair value compared to amortized cost or cost, as appropriate; the length of time the security's fair value has been below amortized cost or cost; our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in value; specific credit issues related to the issuer; and current economic conditions.

In our consolidated results, expenses consist of loss and loss adjustment expenses, operating expenses, interest expenses, and income taxes.

Losses and loss adjustment expenses. We establish loss and loss adjustment expense reserves in an amount equal to our estimate of the ultimate liability for claims under our insurance and reinsurance policies and the cost of adjusting and settling those claims. Our provision for loss and loss adjustment expense reserves in any period includes estimates for losses incurred (that is, the total losses sustained by us under policies, whether paid or unpaid) during such period and changes in estimates for prior periods.

Operating expenses. Operating expenses include acquisition costs, statistical and regulatory fees and assessments, premium taxes and overhead costs. With respect to CastlePoint Re, operating expenses also include excise taxes.

Acquisition costs consist of direct and ceding commission expense and the portion of operating expenses that are related to the acquisition of insurance business. These costs are capitalized and amortized as an expense as the premiums are earned on the policies or treaties to which they pertain.

Operating expenses that are not related to the acquisition of business, or overhead costs, are generally fixed in nature and do not vary significantly with the amount of premiums written. These costs are generally expensed in the calendar period in which they are incurred. Capitalized expenditures which are related to certain technology and other projects or for the acquisition of software, and acquisitions of equipment or leasehold improvement assets are capitalized and amortized as an expense over the estimated useful lives of such capitalized expenditures and assets.

In our insurance and reinsurance segments, we refer to the operating expenses that we incur as underwriting expenses. Underwriting expenses consist of direct and ceding commission expenses and other underwriting expenses. In our insurance services segment, we refer to our operating expenses as insurance services expenses, which consist of direct commission expense and other insurance services expenses. On a consolidated basis, operating expenses for all three business segments consist of direct and ceding commission expenses and other operating expenses as explained below:

Interest expenses. Interest expense is a function of outstanding borrowing or funding commitments and the contractual interest rate related to these commitments.

Income taxes. We will incur federal, state and local income taxes and other taxes. Income taxes are a function of our profitability, the proportion of the income before income taxes reported by our U.S. operations, and the tax rate in the jurisdictions in which we do business.

We use various measures to analyze the growth and profitability of business operations. For insurance and reinsurance business, we measure growth in terms of gross and net premiums written and we measure underwriting profitability by examining our loss, expense and combined ratios. A combined ratio is generally the sum of the loss ratio and the underwriting expense ratio calculated as described below. We also measure our gross and net written premiums to surplus ratios to measure the adequacy of capital in relation to premiums written. For insurance services, we measure growth in terms of fee income produced for insurance company services provided. We analyze profitability by evaluating income before taxes. On a consolidated basis, we measure profitability in terms of net income and return on average equity.

Premiums written. We use gross premiums written to measure our sales of insurance and reinsurance products. Gross premiums written also correlates to our ability to generate net premiums earned and, for certain products, fee income.

Loss ratio. The loss ratio is the ratio of losses and loss adjustment expenses incurred to premiums earned and measures the underwriting profitability of our insurance and reinsurance business after the effect of any reinsurance.

Underwriting expense ratio. The underwriting expense ratio is the ratio of direct and ceding commission expenses and other underwriting expenses less policy billing fees to premiums earned. The underwriting expense ratio measures our operational efficiency in producing, underwriting and administering our insurance and reinsurance business. We calculate our underwriting expense ratios on a gross basis (before the effect of ceded reinsurance) to measure our operational efficiency and on a net basis (after the effect of ceded reinsurance and related ceding commission income) to measure the effects on our consolidated income before income taxes. Ceding commission revenue is applied to reduce our gross underwriting expenses in our insurance and reinsurance company operations.

Combined ratio. We use the combined ratio to measure our underwriting performance. The combined ratio is the sum of the loss ratio and the underwriting expense ratio. We analyze the combined ratio on a gross (before the effect of reinsurance) and net basis (after the effect of reinsurance). If the combined ratio is at or above 100%, we are not underwriting profitably and may not be profitable unless investment income is sufficient to offset underwriting losses.

Net income and return on average equity. We use net income to measure our profits and return on average equity to measure our effectiveness in utilizing our shareholder's equity to generate net income on a consolidated basis. In determining return on average equity for a given year, net income is divided by the average of shareholder's equity for that year.

Our consolidated financial statements contain certain amounts that are inherently subjective in nature and require management to make assumptions and best estimates to determine the reported values. If factors such as those described under the section captioned "Risk Factors" in this prospectus cause actual events or results to differ materially from management's underlying assumptions or estimates, actual results may differ, perhaps substantially, from the estimates.

Estimates are made primarily for unreported written premiums and losses. Errors in estimation of unreported written premiums generally do not have a material impact on our financial results, because the unreported written premiums are usually estimated for only the most recent month and the amount of written premiums for the most recent month that is earned as of the end of a given calendar quarter is approximately 1/24 of the written premiums for that month. However, errors in estimation of unreported losses can have a material impact on our financial results, since the loss reserves accumulate for many accident years until all losses are paid.

The critical accounting policies and estimates set forth below involve, among others, the reporting of premiums written and earned, reserves for losses and loss adjustment expenses (including reserves for losses that have occurred but had not been reported by the financial statement date), and the reporting of deferred acquisition costs and investments.

Premiums. Premiums written on insurance programs or assumed reinsurance are expected to be written primarily on a "policies attaching" basis and cover losses which attach to the underlying insurance policies written during the terms of the contracts. Premiums earned on a "policies attaching" basis usually extend beyond the calendar year in which the reinsurance contract is written, typically resulting in recognition of premiums earned over a 24 month period; this is because most policies have a term of 12 months, and policies written with an effective date in December, for instance, are not fully earned until December of the following year. We may also assume premiums on contracts and policies written on a losses occurring basis, which cover losses that occur during the term of the contract or policy, typically 12 months, and the premium is earned evenly over the term.

Assumed premiums written and ceded may include estimates based on information received from brokers and ceding companies, and any subsequent differences arising on such estimates are recorded in the periods in which they are determined. Our management estimates premiums on our excess of loss reinsurance contracts when the business is underwritten. For such contracts, the minimum and deposit premium, as defined in the contract, is generally considered to be the best estimate of the contract's written premium at inception. This amount is determined by the underwriters based upon analysis of the prior written premium experience of the ceding companies, plans for growth in the current year as stated by the ceding companies, and our proportion of the ceding companies' written premiums based upon the terms of the reinsurance contracts. Accordingly, we generally record this amount as written premium in the period in which the underlying risks incept. As actual premiums are reported by brokers or ceding companies, management evaluates the appropriateness of the premium estimate and any adjustment to this estimate is recorded in the period in which it becomes known. In addition, if estimates of unreported written premiums are required for a particular ceding company at the end of an accounting period, the monthly trend in written premiums and historical seasonality of written premiums for these ceding companies are analyzed to determine a best estimate of the unreported written premiums.

While we attempt to obtain current assumed premiums written statements from ceding companies, it is common that the most recent month statements are not received from the ceding company until after the period ending and, in some cases, the most recent quarter. Therefore, assumed premiums written from these ceding companies are estimated for the most recent month or, in some cases, for several months. With respect to CastlePoint Re's three quota share reinsurance agreements with Tower's insurance companies, we obtain current monthly statements and assumed premiums written from Tower on an actual, rather than estimated, basis. For ceding companies from which we have not received current monthly statements and therefore must estimate the most recent period's assumed premiums written, the difference between the estimated assumed premiums written and actual assumed premiums written is reflected in the subsequent accounting period or as soon as the actual assumed premiums written are obtained. For our most recent quarter ended September 30, 2006, approximately 10.4% of the assumed written premiums and approximately 2.3% of the corresponding assumed earned premiums are based upon premium estimates.

Under our pooling agreements, we will determine the net written premiums that would result after application of the pooling terms for each pooling agreement, and we record as additional net written premiums the difference between the written premiums recorded on a direct basis on our companies' books and the net written premiums that would be recorded after application of the pooling terms.

Minimum and deposit premiums are generally not changed throughout the term of a reinsurance contract, although this has no impact on net written premiums since the deposit premiums only affect cash receipts and premiums receivable.

Reinstatement premiums are written at the time a loss event occurs where coverage limits for the remaining life of the contract are reinstated under pre-defined contract terms. Depending on the terms of the reinstatement premiums, they are earned over the remaining risk period or immediately. Reinstatement premiums are not expected to be a significant portion of our net written premiums, since we do not write significant amounts of property catastrophe excess of loss treaties where reinstatement premiums are common, and in cases where we write such reinsurance, we do not underwrite it in property catastrophe prone areas where reinstatement premiums are more common.

In addition to the assumptions disclosed under the "—Critical Accounting Policies" regarding premium and revenue recognition, data received from Tower has a significant impact on our results of operations. As of September 30, 2006, Tower's contracts were updated and, therefore, no significant estimates were made. If Tower discloses the impact of any changes in its estimates on its direct book of business, this would have a direct impact on our results of operations. At that time, we would be required to disclose the relevant impact on our results of operations.

Losses and Loss Adjustment Expense Reserves. Our losses and loss adjustment expense reserves, for both reported and unreported claims obligations, are maintained to cover the estimated ultimate liability for all of our insurance and reinsurance obligations. Losses and loss adjustment expense reserves are categorized in one of two ways: (i) case reserves, which represent unpaid losses and loss adjustment expenses as reported by cedants to us or as estimated by our claims adjusters retained by us, and (ii) incurred but not reported reserves, or IBNR reserves, which are reserves for losses and loss adjustment expenses that have been incurred, but have not yet been reported to us, as well as additional amounts relating to losses already reported, that are in excess of case reserves. IBNR reserves are estimates based on all information currently available to us and are reevaluated on a quarterly basis utilizing the most recent information supplied by our cedants and by our own claims adjusters.

For reinsurance, we rely on initial and subsequent claims reports received from ceding companies to establish our estimate of losses and loss adjustment expenses. For insurance programs, we rely on initial and subsequent claims reports as estimated by claims adjusters retained by us or by the program

underwriting agents. For insurance risk sharing, we rely on initial and subsequent claims reports received from the insurance companies with which we do business.

The types of information that we receive from ceding companies generally vary by the type of contract. Proportional, or quota share, contracts are typically reported on a monthly or quarterly basis, providing premium and loss activity as estimated by the ceding company. Reporting for excess of loss contracts includes detailed individual claim information, including a description of the loss, confirmation of liability by the cedant and the cedant's current estimate of the ultimate liability under the claim. Generally, ceding companies are obligated to notify the reinsurer within a limited amount of time about any claim that is reported to them, which has characteristics making it probable that the claim will be covered by the excess reinsurance. Upon receipt of claims notices from cedants, we review the nature of the claim against the scope of coverage provided under the contract. Questions arise from time to time regarding the interpretation of the characteristics of a particular claim measured against the scope of contract terms and conditions. Reinsurance contracts under which we assume business generally contain specific dispute resolution provisions in the event that there is a coverage dispute with the ceding company. The resolution of any individual dispute may impact estimates of ultimate claim liabilities.

Reported claims are in various stages of the settlement process. Each claim is settled individually based on its merits, and certain claims may take several years to settle, particularly where legal action is involved. During this period, additional facts may be revealed, and as these factors become apparent, case reserves will be adjusted, sometimes requiring an increase in our overall reserves, including our IBNR reserves.

We generally reserve for each treaty that we reinsure separately, so that we are able to take into consideration the underlying loss development patterns of each ceding company to the extent supported in the data reported by each ceding company. While ceding companies may report their own estimates of IBNR, we independently analyze the losses for each treaty, and consequently we may choose to establish IBNR reserves in an amount different from the amount reported by the ceding company.

We may aggregate similar types of treaties and the claim information provided by our ceding companies or insurance companies with which we do business for analysis purposes by the year in which each treaty is written and the type of business included in the treaties. We also supplement this information with claims and underwriting audits of specific contracts, internally developed pricing trends, as well as loss trend data developed from industry sources. We audit both the underwriting and the claims practices of our ceding companies. As part of our underwriting audits, we seek to confirm that the ceding company is insuring the types of risks and achieving the level of pricing that we assumed in our underwriting of the treaty from that ceding company. As part of our claims audits, we seek to confirm the data accuracy of the claim information that we have received from the ceding company, and learn about changes in case reserving approach by the ceding company and any particular information about specific claims that may have a significant impact on the results reinsured in our treaty with the ceding company.

The reserve methodologies employed by us are dependent on the data that we collect from ceding companies and insurance companies with which we do business. This data primarily consists of loss amounts estimated by the claims adjusters handling the claims, loss payments made by the ceding companies or insurance companies with which we do business, and premiums written and earned reported by the ceding companies and insurance companies with which we do business.

Reserves for losses and loss adjustment expenses are also based in part upon the estimation of losses resulting from catastrophic events. Estimation of the losses and loss adjustment expenses resulting from catastrophic events is inherently difficult because of the possible severity of catastrophe claims, difficulties entering catastrophe hit areas to estimate claim amounts, and delays in receiving information about claims from program administrators or ceding companies. Therefore, we supplement

the methods described above by utilizing commercially available models for purposes of evaluating and providing an estimate of ultimate claims costs.

This information is used to develop point estimates of carried reserves for each business segment and line of business. These individual point estimates, when aggregated, represent the total carried losses and loss adjustment expense reserves carried in our consolidated financial statements. While we analyze our reserves estimates utilizing different methods, we do not attempt to produce a range around our point estimate of loss. Also, we do not include a specific provision in our loss reserves for adverse deviation.

Changes in loss reserves estimates may result from (1) variability in the estimation process itself, and (2) the fact that external factors may cause changes in the future that are not reflected in historical patterns. With respect to the former source of variability, i.e. estimation process variation, we believe that a reasonably likely range for the loss reserves can be represented by a standard utilized by some professional, independent actuaries as part of their certification of an insurer's reserves. That standard contemplates that the company's loss reserves must be in a range from minus 5% to plus 10% of the independent actuary's best estimate. Utilizing this standard as a guide, we believe that most professional actuaries, assuming they are presented with the same information, would determine that the loss reserves can be certified if they fall within a range of minus 5% to plus 10%. Therefore, it is reasonably likely that some professional actuaries, assuming they are presented with the same information relating to our company, would determine a best estimate of our loss reserves to be between $21.1 million and $24.4 million, as compared to our own best estimate of the loss reserves, which is $22.2 million. No assurance can be given that outcomes outside of the above range cannot occur, as outcomes outside of such range are possible. In addition, the above range assumes that future patterns are similar to historical patterns, as to which there can be no assurance. With regard to the potential variability in loss reserves estimates due to the fact that future patterns may differ from historical patterns, we believe there is additional potential variability that cannot be estimated.

Since we are a newly formed company and have a very limited operating history, we do not have historical experience that reflects how our loss reserves estimates will likely develop. Moreover, past experience of how loss reserves estimates develop may not be indicative of future development of loss reserves estimates. However, since we currently derive a substantial portion of our overall business from Tower and since we believe that such business is representative of the types of business that we seek or will seek from third parties, Tower's loss reserves development experience may be an indicator of how changes in estimates of loss reserves may impact future earnings. The following table sets forth the estimated loss reserves of Tower for the specified calendar years and reflects how those estimates of loss reserves have changed from the date they were originally established through December 31, 2005. Unless indicated otherwise, this information has been extracted from Tower's annual report on Form 10-K for the year ended December 31, 2005, as filed with the SEC. The information of Tower set forth below should be read together with Tower's public filings, including but not limited to, the annual report listed above, in their entirety. In addition, there may have been material developments with respect to Tower, which are not disclosed in this prospectus.

Year	Loss Reserves Estimated as of the End of Calendar Year as originally established (in thousands of dollars)	Loss Reserves re- estimated as of December 31, 2005 (in thousands of dollars)	Percentage (Deficiency) Redundancy in Loss Reserves(1)
2005	101,746	101,746	Not applicable
2004	36,949	36,557	1.1	%
2003	24,361	24,815	(1.9	)%
2002	15,476	16,461	(6.4	)%

The actuarial techniques for projecting losses and loss adjustment expense reserves rely on historical paid and case reserve loss emergence patterns and historical patterns of how reported claims develop over time, as more information is gathered, including the outcomes of legal actions and other events or factors that may affect the outcome of claims. The selection of loss development factors is a key element of most of the actuarial loss reserving methods. Loss development factors are key assumptions, as illustrated by the fact that the incurred loss development method, which is one of the basic reserving techniques, estimates ultimate losses by multiplying reported losses times the loss development factor.

The table set forth below reflects loss development experience for Tower's Commercial Multiple-Peril line of business (as such term is defined in the NAIC Property/Casualty Annual Statement Instructions), which is currently Tower's largest line of business. Tower has informed us that the below information has been extracted from Tower's statutory annual statements for the years 1995 through 2005. The table reflects the amount of claims reported as of the end of the accident year, i.e. after 12 months, and also after one additional year of maturity (that is, reflecting claim development after 24 months). The last column sets forth the loss development factor, or LDF, which is the ratio of the amount of reported losses after 24 months, divided by the amount of reported losses after 12 months.

Year	Reported Losses After 12 months (in thousands of dollars)	Reported Losses After 24 months (in thousands of dollars)	Loss Development Factor
1995	2,640	3,236	1.23
1996	2,174	3,641	1.67
1997	2,476	3,465	1.40
1998	3,240	4,081	1.26
1999	4,083	6,372	1.56
2000	4,521	6,628	1.47
2001	6,165	7,742	1.26
2002	9,985	15,610	1.56
2003	19,735	26,952	1.37
2004	27,343	36,948	1.35

Actuaries utilize various indicators to select best estimate loss development factors. For example, based on the information set forth in the above table, the average loss development factor for all ten years was 1.41, the average for the last three years was 1.43, and the median (or middle point) loss development factor of all ten years was 1.383. We believe that any of these three loss development factors would be reasonably likely estimates with respect to this line of business and for this age of maturity. The difference between selecting 1.43 or 1.383, the highest and the lowest of the three numbers, as the best estimate loss development factor would make a difference in the estimated reserves of 3.4% (that is, (1.43/1.383)-1). Our actuaries make their best estimates of the loss development factors for each line of business, typically for each treaty, and for each age of claim development, and variation in the loss development factors that are selected is a primary source of variability in the best estimate of ultimate losses and, therefore, of our loss reserves.

In order to better understand the underlying loss characteristics and further improve our best estimates of loss reserves, our estimate of ultimate loss is determined based on a review of the results of several commonly accepted actuarial projection methodologies. Our estimate of ultimate loss also incorporates qualitative information, such as changes in the claims department, business mix, pricing and knowledge about specific large claims. The specific methodologies we utilize in our loss reserve review process include, but may not be limited to, (i) incurred and paid loss development methods; (ii) incurred and paid Bornhuetter Ferguson, or BF, methods; (iii) loss ratio methods; and (iv) claim severity and frequency methods. Due to the nature of our business, all of these methods may not be

practical based upon the information provided by the ceding company for each treaty, and also various methodologies are actuarially more appropriate given the line of business, the maturity of the treaty, the limits insured or reinsured, the type of treaty, and other considerations. Generally, we rely on BF and loss ratio methods for estimating ultimate loss liabilities for more recent treaty years. These methodologies, at least in part, apply a loss ratio, determined from aggregated analyses of internally developed pricing trends, to premiums earned on that business. Adjustments to premium estimates generate appropriate adjustments to ultimate loss estimates in the quarter in which they occur. To estimate losses for more mature treaty years, we generally rely on the incurred loss development methodology. This methodology relies on loss emergence analyses determined from cedant supplied claim information. For property catastrophe losses, we may utilize vendor catastrophe models to estimate ultimate loss soon after a loss occurs, where loss information is not yet reported to us from cedants. IBNR is determined by subtracting the total of paid loss and reported reserves from ultimate loss.

Our actuaries also analyze the estimated average incurred claims severity as a further test on each of the methods, primarily since aberrations in estimated average incurred claims severity are further analyzed to determine if there are unusually large claims that are impacting the estimates. In addition, for lines of business where there is small variance in the claims severity amounts, for example, where the limits covered are small, the estimated average incurred loss severity generally is in line with inflationary changes over experience in the prior years.

Any future impact to income of changes in losses and loss adjustment expense estimates may vary considerably from historical experience. Our estimates of ultimate loss exposures are based upon the information we have available at any given point in time and our assumptions based upon that information. Changes in estimates of losses and loss adjustment expenses are reflected as adjustments to income in the period in which the estimate is revised. Under U.S. GAAP, we are not permitted to establish loss reserves until the occurrence of an actual loss event. As a result, only loss reserves applicable to losses incurred up to the reporting date may be recorded, with no allowance for the provision of a contingency reserve to account for expected future losses. Losses arising from future events, which could be substantial, are estimated and recognized at the time the loss is incurred.

Estimates of reserves for unpaid losses and loss adjustment expenses also may be impacted by legislative, regulatory, social, economic and legal events and trends that may or may not occur or develop in the future, thereby affecting assumptions of claims frequency and severity.

Our reserving process is the same each quarter as at the end of the year, although at the end of the year we also obtain independent actuarial reviews of our loss reserves. We utilize the independent actuarial review as a test of our internal actuarial estimates. If the difference between our internally estimated reserves and the independent actuarial estimates are less than 5% of the total reserves balance, then we do not necessarily adjust our internally determined estimates. If the differences between the reserves estimated by us and by the independent actuary are greater than 5%, we analyze the specific assumptions generating that difference and adjust our reserves if we consider it appropriate to do so.

Deferred acquisition costs. We defer certain expenses that are directly related to and vary with producing insurance and reinsurance business, including commission expense on gross premiums written, premium taxes and certain other costs related to the acquisition of insurance and reinsurance contracts. These costs are capitalized and the resulting asset, deferred acquisition costs, is amortized and charged to expense in future periods as gross premiums written are earned. The method followed in computing deferred acquisition costs limits the amount of such deferral to its estimated realizable value. The ultimate recoverability of deferred acquisition costs is dependent on the continued profitability of our insurance and reinsurance underwriting. If our underwriting ceases to be profitable,

we may have to write off a portion of our deferred acquisition costs, resulting in a further charge to income in the period in which the underwriting losses are recognized.

The balance in deferred acquisitions cost was $24.2 million as of September 30, 2006. The combined ratio for the period from inception to September 30, 2006 was 89.1%, and is expected to remain in the range of 85% to 95% in the future. In determining recoverability of deferred acquisition costs, future profitability of our insurance and reinsurance underwriting is considered, including investment income.

Investments. In accordance with our investment guidelines, our investments initially consist of high-grade marketable fixed income securities. We may, in the future, elect to invest a portion of our funds in equity securities, including strategic investments that we may make in the insurance companies or program underwriting agents with whom we do business. Investments in marketable securities which we make in the ordinary course of business are classified as available for sale and carried at fair value as determined by the market price of each security as of the balance sheet date. Unrealized gains and losses on such investments are included in other comprehensive income and as a separate component of shareholder's equity. Realized gains and losses on sales of investments are determined on a specific identification basis. Investment income is recorded when earned and includes the amortization of premiums and discounts on investments. Investments in insurance companies or program underwriting agents that are deemed to represent significant influence as provided under U.S. GAAP accounting pronouncements are accounted for on an equity accounting basis or other accounting basis as may be required according to U.S. GAAP standards governing those situations.

We do not expect our investment portfolio to include options, warrants, swaps, collars or similar derivative instruments. In the event that we do make such investments, our investment policy guidelines provide that financial futures and options' and foreign exchange contracts may not be used in a speculative manner, but may be used, subject to certain numerical limits, only as part of a defensive strategy to protect the market value of the portfolio. Also, our portfolio will not contain any direct investments in real estate or mortgage loans.

Impairment of investment securities results in a charge to income when a market decline below cost is deemed to be other-than-temporary. We regularly review our fixed maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. We focus our attention on those securities whose fair value is less than amortized cost or cost, as appropriate. In evaluating potential impairment, we consider, among other criteria: the current fair value compared to amortized cost or cost, as appropriate; the length of time the security's fair value has been below amortized cost or cost; our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in value; specific credit issues related to the issuer; and current economic conditions.

The net unrealized gain was $2.1 million for the period from inception to September 30, 2006, including negligible gross unrealized losses. Securities in an unrealized loss position are reviewed for impairment on a regular and case by case basis, during which review we look for deterioration of credit quality and other factors that would adversely affect price of the security. There could be an instance where a security was in an unrealized loss position and not considered impaired by our management; however, due to changes in our liquidity requirements, a future decision may be made to sell the security at a loss. At the time such a decision is made, we would recognize a charge against net income.

Reinsurance accounting. We account for reinsurance in conformity with SFAS 113, "Accounting and Reporting for Reinsurance of Short Duration and Long Duration Contract". This standard requires us to report assets and liabilities relating to reinsured contracts gross of the effects of reinsurance. This standard also establishes the conditions required for a contract with a reinsurer to be accounted for as reinsurance and prescribes accounting and reporting standards for such contracts. Written premiums, earned premiums, incurred losses and loss adjustment expenses reflect the net effects of assumed and ceded reinsurance transactions. Reinsurance accounting is followed for assumed and ceded transactions when risk transfer requirements have been met. These requirements involve significant assumptions relating to the amount and timing of expected cash flows, as well as the interpretation of underlying contract terms. We did not have any ceded reinsurance contracts during this period and all of our assumed reinsurance meets the criteria in SFAS 113 for treatment as reinsurance.

Although we do not anticipate offering reinsurance contracts that do not meet risk transfer requirements, any reinsurance contracts that do not transfer significant insurance risk will be accounted for as deposits. These deposits are accounted for as financing transactions, with interest expense credited to the contract deposit.

We intend to purchase ceded reinsurance, known as retrocession reinsurance, to protect our reinsurance subsidiary, CastlePoint Re, as well as CastlePoint Insurance Company and any other U.S. licensed insurance companies that we may acquire. The retrocession reinsurance we plan to purchase is intended to bring our aggregate property excess of loss exposure on a net basis to less than 10% of our equity. We may also purchase retrocession protection in situations where we desire to limit our net loss for any single underlying policy to lower amounts, generally less than 1% of our equity. The costs we will need to expend to obtain retrocession reinsurance are built into the pricing of our programs and reinsurance treaties and, therefore, we do not expect that such costs will materially affect our future results of operations or cash flow.

Intangible assets and potential impairment. The costs of a group of assets acquired in a transaction will be allocated to the individual assets including identifiable intangible assets based on their relative fair values. Identifiable intangible assets with a finite useful life are expected to be amortized over the period which the asset is expected to contribute directly or indirectly to our future cash flows. Identifiable intangible assets with finite useful lives will be tested for recoverability whenever events or changes in circumstances indicate that a carrying amount may not be recoverable, or at least annually. An impairment loss will be recognized if the carrying value of an intangible asset is not recoverable and its carrying amount exceeds its fair value. Significant changes in the factors we will consider when evaluating our intangible assets for impairment losses could result in a significant change in impairment losses reported in our consolidated financial statements. Identifiable intangible assets with indefinite lives will be subject to an annual test for recoverability and an impairment loss recognized in the same manner. No balance exists at the current time for intangible assets. In the future, there could be a time when a potential balance would exist for this item. At that time, we will document the proper accounting policy and disclose the same in our financial statements, related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The deferred tax asset net of valuation allowance balance as of September 30, 2006 was zero. In assessing the valuation of deferred tax assets, we consider whether it is more likely than not that some portion or all the deferred tax will be realized. The ultimate realization of deferred tax assets is

dependent upon the generation of future taxable income to offset previous operating losses or during periods in which temporary differences become deductible. A valuation allowance against deferred tax assets has been established since we, as a start up operation, are unable to assert that, it is more likely than not that the deferred tax assets will be realized. As of September 30, 2006, a valuation allowance of $0.5 million was established and will be reevaluated at the end of each reporting period. Although our management currently believes that a full valuation allowance is necessary, there remains potential for us to recover some or all of the assets based primarily upon future profitability of our U.S. operations.

Unpaid losses and loss adjustment expenses recoverable. Ceded losses recoverable from reinsurers is estimated using techniques and assumptions consistent with those used in estimating the liability for losses and loss adjustment expenses, and represent management's best estimate of such amounts. However, as changes in the estimated ultimate liability for losses and loss adjustment expenses are determined, the estimated ultimate amount recoverable from reinsurers will also change. Accordingly, the ultimate recoverable could be significantly in excess of or less than the amount indicated in the consolidated financial statements, and adjustments to these estimates are reflected in current operations.

The following table summarizes our results of operations for the three months ended September 30, 2006, and for the period from our inception on November 16, 2005 through September 30, 2006. The results of operations for such periods are not necessarily indicative of the results that may be expected for the period ended December 31, 2006, as interim results may be affected by several factors including, but not limited to, changes in the economic environment. In the opinion of our management, the unaudited interim consolidated results of operations for the three months ended September 30, 2006 and for the period from inception to September 30, 2006, which are

presented below, contain all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods included herein.

We calculate our loss and expense ratios by segment. See "—Insurance Segment Results of Operations," "—Reinsurance Segment Results of Operations" and "—Insurance Services Segment Results of Operations" below.

Consolidated Results of Operations for the Three Months Ended September 30, 2006

Total revenues. Total revenues were $31.7 million for the three months ended September 30, 2006, which consisted of net premiums earned (85.3% of the total revenues), commission income (2.7% of the total revenues) and net investment income (12.0% of the total revenues).

Premiums earned. Net premiums earned were $27.0 million for the three months ended September 30, 2006. The total business ceded to us under our reinsurance agreements with Tower's insurance companies represented 96.7% of net premiums earned. The ratio of net premium earned to net premium written for the three months ended September 30, 2006 was 62%, as compared to 28% for the three months ended June 30, 2006. This reflects a significant increase from the prior quarter, which was our first quarter of operations.

Commission income. Commission income was $0.9 million for the three months ended September 30, 2006. We received almost all of this commission income as a result of CastlePoint Management's management of the commercial umbrella specialty program that was transferred to us by Tower.

Net investment income and realized gains. Net investment income was $3.8 million for the three months ended September 30, 2006 and the book yield was 5.5%, which reflects a more complete implementation of our investment strategy and the fact that our invested assets presently continue to grow, as our premiums received presently exceed paid losses.

Loss and loss adjustment expenses. Loss and loss adjustment expenses were $13.9 million, which produced a 51.5% loss ratio for the three months ended September 30, 2006. The quota share loss ratio of Tower's brokerage business was 52.6%. The loss ratio for the three months ended September 30, 2006 was favorably impacted by a revised estimate for Tower's brokerage business, which was previously estimated to be 55.7%.

Operating expenses. Operating expenses were $12.4 million for the three months ended September 30, 2006. Of this amount, commission expense was $9.9 million and other underwriting expenses were $2.5 million, including corporate expenses (namely, audit, legal services and insurance expenses) at the holding company level.

Net income and return on average equity. Our net income and average return on equity was $5.4 million and 8.0%, respectively, for the three months ended September 30, 2006. For the third quarter of 2006, the return was calculated by dividing annualized net income of $21.5 million by average shareholders' equity of $270.0 million. Our net income of $5.4 million for the three months ended September 30, 2006 reflects increasing profitability, as compared to a net loss of $1.7 million for the three months ended June 30, 2006. This increase was due primarily to the ratio of net premium earned to net premium written for the three months ended September 30, 2006, which was 62% for the three months ended September 30, 2006, as compared to 28% for the three months ended June 30, 2006, our first quarter of operations. The increase in our net income was also due to the fact that the three months ended June 30, 2006 included recognition of the expense of the warrants we granted to Tower in the amount of $4.6 million. In addition, net investment income increased by 30.5% in the three months ended September 30, 2006, as compared to the three months ended June 30, 2006.

Total revenues. Total revenues were $55.5 million for the period from inception to September 30, 2006, which consisted of net premiums earned (85.4% of the total revenues), commission income (2.5% of the total revenues) and net investment income (12.1% of the total revenues).

Premiums earned. Net premiums earned were $47.4 million for the period from inception to September 30, 2006. The business ceded to CastlePoint Re under its reinsurance agreements with Tower's insurance companies represented 98.0% of net premiums earned.

Commission income. Commission income was $1.4 million from inception to September 30, 2006. We received almost all of this commission income as a result of CastlePoint Management's management of the commercial umbrella specialty program that was transferred to us by Tower.

Net investment income and realized gains. Net investment income was $6.7 million from inception to September 30, 2006. The investment book yield was 5.5%.

Loss and loss adjustment expenses. Loss and loss adjustment expenses were $25.3 million, which produced a 53.4% loss ratio for the period from inception to September 30, 2006. The quota share loss ratio of Tower's brokerage business was 54.0%.

Operating expenses. Operating expenses were $21.8 million for the period from inception to September 30, 2006; of this amount, commission expense was $17.4 million and other underwriting expenses were $4.4 million, including corporate expenses (namely, audit, legal services and insurance expenses) at the holding company level.

Other expense. We recorded an expense of $4.6 million relating to the warrants we issued to Tower.

Net income and return on average equity. Our net income and average return on equity was $3.7 million and 2.7%, respectively, for the period from inception to September 30, 2006. The return was calculated by dividing annualized net income of $4.3 million by average shareholders' equity of $157.0 million.

We did not have any insurance operations during the three months ended September 30, 2006 and during the period from inception to September 30, 2006.

The following table summarizes the results of operations for our reinsurance segment for the three months ended September 30, 2006 and for the period from our inception on November 16, 2005 through September 30, 2006:

	Inception to September 30, 2006		Three Months Ended September 30, 2006
Loss Ratios:
Gross	53.4	%	51.5	%
Net	53.4	%	51.5	%
Accident Year Loss Ratios:
Gross	53.4	%	51.5	%
Net	53.4	%	51.5	%
Underwriting Expense Ratios:
Gross	35.7	%	35.6	%
Net	35.7	%	35.6	%
Combined Ratios:
Gross	89.1	%	87.1	%
Net	89.1	%	87.1	%

Gross premiums and net premiums. Gross and net written premiums were $43.7 million for the three months ended September 30, 2006 because we did not have any ceded reinsurance during that period. Included in the gross and net written premiums of $43.7 million were new reinsurance programs with insurance subsidiaries of American Safety Insurance Holdings, Ltd. and Preserver Group, Inc. Tower's total business with CastlePoint Re was equal to $39.6 million, which represented 90.7% of our gross written premiums for the three months ended September 30, 2006. Gross and net premiums earned were $27.0 million for the three months ended September 30, 2006. Tower's business represented 96.7% of net premiums earned.

Loss and loss adjustment expenses and loss ratio. Loss and loss adjustment expenses were $13.9 million, which produced a 51.5% loss ratio for the three months ended September 30, 2006. The quota share loss ratio of Tower's brokerage business was 52.6% for the three months ended September 30, 2006.

Underwriting expenses and underwriting expense ratio. Underwriting expenses for the reinsurance segment are comprised of ceding commission paid to insurance companies writing direct business ceded to CastlePoint Re and other underwriting expenses. Ceding commission expense was $9.3 million and other underwriting expenses were $0.3 million for the three months ended September 30, 2006. Both the gross underwriting expense ratio and the net underwriting expense ratio were 35.6% for the three months ended September 30, 2006, because we did not have any ceded reinsurance during that period.

Underwriting profit and combined ratio. The underwriting profit and combined ratio from the reinsurance segment was $3.5 million and 87.1% for the three months ended September 30, 2006. Our results are highlighted by our 51.5% loss ratio recorded in the third quarter, which was driven primarily by the brokerage business quota share reinsurance arrangements between CastlePoint Re and Tower's insurance companies.

Gross premiums and net premiums. Gross and net written premiums were $116.4 million for the period from inception to September 30, 2006 because we did not have any ceded reinsurance during that period. Included in the gross and net written premiums of $116.4 million was the transfer of unearned written premiums in the amount of $40.9 million. Tower's total business with CastlePoint Re was equal to $111.1 million, which represented 95.4% of our gross written premiums for the period from inception to September 30, 2006. Gross and net premiums earned were $47.4 million for the three months ended September 30, 2006. Tower's business represented 98.0% of net premiums earned.

Loss and loss adjustment expenses and loss ratio. Loss and loss adjustment expenses were $25.3 million, which produced a 53.4% loss ratio for the period from inception to September 30, 2006. Tower's brokerage quota share loss ratio was 54.0% for the period from inception to September 30, 2006.

Underwriting expenses and underwriting expense ratio. Underwriting expenses for the reinsurance segment are comprised of ceding commission paid to insurance companies writing direct business ceded to CastlePoint Re and other underwriting expenses. Ceding commission expense was $16.4 million and other underwriting expenses were $0.5 million for the period from inception to September 30, 2006. Both the gross underwriting expense ratio and the net underwriting expense ratio were 35.7% for the period from inception to September 30, 2006 because we did not have any ceded reinsurance during that period.

Underwriting profit and combined ratio. The underwriting profit and combined ratio from the reinsurance segment was $5.2 million and 89.1% for the period from inception to September 30, 2006.

Our results are highlighted by our 53.4% loss ratio recorded in the third quarter, which was driven primarily by the brokerage business quota share reinsurance arrangements between CastlePoint Re and Tower's insurance companies.

The following table summarizes the results of operations for our insurance services segment for the three months ended September 30, 2006, and from our inception on November 16, 2005 through September 30, 2006:

Direct commission revenue. Direct commission revenue is dependent upon the premiums written during the year with respect to program business produced through CastlePoint Management. Commission income was $0.9 million for the three months ended September 30, 2006, based upon certain underwriting and claims services rendered by CastlePoint Management with respect to the specialty program business and insurance risk-sharing business on its books.

Direct commission expense. Direct commission expense was $0.6 million for the three months ended September 30, 2006, which consisted of the commission fees paid to producing agents for services rendered on behalf of the specialty program business and insurance risk-sharing business on CastlePoint Management's books.

Other insurance services expenses. Other insurance services expenses were $1.0 million for the three months ended September 30, 2006. This amount includes $0.2 million of costs incurred and charged by Tower's insurance companies for services provided to us.

Insurance Services Loss. Insurance services loss was $0.8 million for the three months ended September 30, 2006. Due to the fact that CastlePoint is a newly formed company, CastlePoint Management is currently incurring costs at a higher rate than the rate at which revenues are generated by the business that is currently on CastlePoint Management's books.

Direct commission revenue. Direct commission revenue is dependent upon the premiums written during the year with respect to the program business produced through CastlePoint Management. Commission income was $1.4 million for the period from inception to September 30, 2006, based upon certain underwriting and claims services rendered by CastlePoint Management with respect to the specialty program business and insurance risk-sharing business on its books.

Direct commission expense. Direct commission expense was $1.0 million for the period from inception to September 30, 2006, which consisted of the commission fees paid to producing agents for services rendered on behalf of the specialty program business and insurance risk-sharing business on CastlePoint Management's books.

Other insurance services expenses. Other insurance services expenses were $1.8 million for the period from inception to September 30, 2006. This amount includes $0.5 million of costs incurred and charged by Tower's insurance companies for services provided to us.

Insurance services loss. Insurance services loss was $1.4 million for the period from inception to September 30, 2006. Due to the fact that CastlePoint is a newly formed company, CastlePoint Management is currently incurring costs at a higher rate than the rate at which revenues are generated by the business that is currently on CastlePoint Management's books.

As with other insurance companies and reinsurers, our operating results and financial condition could be adversely affected by volatile and unpredictable natural and man-made disasters, such as hurricanes, windstorms, earthquakes, floods, fires, riots and explosions. Although we attempt to limit our exposure to levels we believe are acceptable, it is possible that an actual catastrophic event or multiple catastrophic events could have a material adverse effect on our financial condition, results of operations and cash flows. As noted above under "—Critical Accounting Policies," under U.S. GAAP, we are not permitted to establish loss reserves with respect to losses that may be incurred under insurance and reinsurance contracts until the occurrence of an event which may give rise to a claim. As a result, only loss reserves applicable to losses incurred up to the reporting date may be established, with no provision for a contingency reserve to account for expected future losses.

Except in Bermuda, we are subject to U.S. federal, state and local income tax requirements in the states in which we operate. Actual tax expense is based on underwriting results plus investment income and other income and expense items, as well as the proportion of taxable earning reported by our U.S. operations. Our effective tax rate will reflect the proportion of taxable income recognized by our operating subsidiaries, including the U.S. based subsidiaries we expect to acquire within the next three to nine months, subject to receipt of regulatory approvals, that generally will be taxed at the U.S. corporate income rate (35%), and CastlePoint Re which is exempt from corporate tax. There is also a 30% withholding tax imposed on dividends paid to us by our U.S. based subsidiaries.

We expect substantially all of our operations to be conducted by our insurance, reinsurance, and management company subsidiaries. Accordingly, we expect to have continuing cash needs for administrative expenses and the payment of principal and interest on any future borrowings and taxes. Funds to meet these obligations will come primarily from dividend payments from our operating subsidiaries. There are restrictions on the payment of dividends by our insurance subsidiaries which are described in more detail under the sections captioned "Risk Factors—Our holding company structure and certain regulatory and other constraints affect our ability to pay dividends and make other payments", "Regulation—Regulation of CastlePoint Re—Minimum Solvency Margin and Restrictions on Dividends and Distributions" and "Regulation—U.S. Regulation—Regulation of Dividends and other Payments from Insurance Subsidiaries."

Our principal consolidated cash requirements are expected to be the capitalization of our existing operating subsidiaries, which includes operating expenses, our acquisition of at least one additional U.S. licensed insurance company within the next nine months, subject to receipt of regulatory approvals, net

cash settlements under the pooling and reinsurance agreements, payment of losses and loss adjustment expenses, commissions paid to program underwriting agents, ceding commissions to insurance companies including Tower, excise taxes, operating expenses and payments under our service and expense sharing agreement with Tower and certain of its subsidiaries. In addition, we will need cash to enable us to make strategic investments in some of our clients and potential clients, including Tower, as well as to pay dividends to our shareholders and to service any debt we or our subsidiaries may incur in the future. We expect to spend up to $75 million to purchase our U.S. licensed insurance companies, including approximately $8.8 million paid to Tower to acquire CastlePoint Insurance Company. See "Business—Acquisitions of U.S. Licensed Insurance Companies." We expect that the purchase price for these companies will consist of the amount to be paid for the value of the target company's insurance licenses and the amount of its statutory capital and surplus, as well as the value of the business if an ongoing operating insurance company is purchased.

We intend to use the net proceeds from this offering to further capitalize CastlePoint Re and for general corporate purposes. Although we do not need to raise additional funds to operate our business currently or to purchase additional U.S. licensed insurance companies, we do expect to need such funds to further grow our business in accordance with our business strategy, which includes supporting our insurance and reinsurance business, as well as making strategic investments. We also may use additional funds to make strategic investments in Tower. As further described below, in December 2006, we borrowed $100 million, the proceeds of which were used for general corporate purposes, including acquisition and capitalization of CastlePoint Insurance Company and financing of our $40 million investment in Tower's non-cumulative convertible perpetual preferred stock. In the event Tower redeems such stock, we will use the proceeds of such redemption to further capitalize CastlePoint Insurance Company and other U.S. licensed insurance companies that we may acquire. See "Business—Strategic Investments."

In December 2006, our subsidiary CastlePoint Management formed two statutory trusts for the purpose of issuing trust preferred securities to institutional purchasers in transactions not requiring registration under the Securities Act. On December 1, 2006, the first trust issued $50.0 million of trust preferred securities in a private placement and invested the proceeds thereof and the proceeds from the sale of the common securities of the trust in exchange for $51.5 million of junior subordinated debentures issued by CastlePoint Management. On December 14, 2006, the second trust issued $50.0 million of trust preferred securities in a private placement and invested the proceeds thereof and the proceeds from the sale of the common securities of the trust in exchange for $51.5 million of junior subordinated debentures issued by CastlePoint Management. All of these debentures have stated maturities of thirty years. CastlePoint Management has the option to redeem any or all of the subordinated debentures beginning five years from the date of issuance, at the principal amount plus accrued and unpaid interest. The interest rate on the subordinated debentures is a combination fixed and floating rate with a fixed rate (equal to 8.66% per annum with respect to the debentures issued on December 1, 2006 and 8.551% per annum with respect to the debentures issued on December 14, 2006) during the first five years, after which the interest rate will be equal to the three month London Interbank Offered Rate plus 3.5% per annum (calculated quarterly). Under the terms for all of the trust preferred securities, an event of default may occur upon:

If an event of default occurs and is continuing, the entire principal and the interest accrued thereon may be declared to be due and payable immediately. Pursuant to the terms of the subordinated debentures, CastlePoint Management and its affiliates controlled thereby cannot declare or pay any dividends if CastlePoint Management is in default or has elected to defer payments of interest on the subordinated debentures. In addition, CastlePoint Management or any of its subsidiaries may not incur any additional indebtedness, unless the same is expressly made junior and subordinate or pari passu in all respects to CastlePoint Management's outstanding subordinated debentures. Finally, each of CastlePoint Holdings and CastlePoint Management issued a guarantee in favor of the holders of the common securities of the trusts and the subordinated debentures of CastlePoint Management.

We also entered into employment agreements, or offered employment, to certain employees and we expect that we will continue to hire additional employees.

Our board of directors currently intends to authorize the payment of an annual cash dividend of $0.10 per common share to our shareholders of record, payable on a quarterly basis. On July 31, 2006, our board of directors authorized the payment of a quarterly dividend of $0.025 per share and a special dividend of $0.025 per share, payable on September 29, 2006 to our shareholders of record as of September 15, 2006. We paid both the quarterly dividend and the special dividend on that date. On October 31, 2006, our board of directors authorized the payment of a quarterly dividend of $0.025 per share and payable on December 29, 2006 to our shareholders of record as of December 15, 2006. See "Dividend Policy." Any future determination to pay dividends is at the discretion of our board of directors and is dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory, rating agency and any contractual restrictions on the payment of dividends and any other factors our board of directors deems relevant, including Bermuda and U.S. state legal and regulatory constraints.

Our primary source of cash is the proceeds from the sale of our common shares in the private offering, which raised approximately $249.2 million, net of offering and related costs. We used these proceeds and the $15.0 million Tower invested in us as follows: (1) approximately $250 million to capitalize our indirect reinsurance subsidiary, CastlePoint Re; and (2) approximately $14 million to capitalize our intermediate Bermuda holding company, CastlePoint Bermuda Holdings, which directly owns CastlePoint Re.

We expect that our future sources of funds will consist of direct and assumed premiums collected, net cash settlements under our pooling and reinsurance agreements, fee income for services provided, investment income and proceeds from sales and redemptions of investments. We also may need to raise additional funds through equity and/or debt financings. In particular, in December 2006 we borrowed $100 million, as described under "—Our Liquidity and Capital Requirements" above.

We or one of our subsidiaries may also enter into an unsecured revolving credit facility and a term loan facility with one or more syndicates of lenders, and we expect to use any such facilities for general corporate purposes, working capital requirements and issuances of letters of credit. We believe that any debt financing or credit facility will require compliance with financial covenants, such as a leverage ratio, a consolidated tangible net worth ratio and maintenance of ratings. Any debt financing or credit facility will likely contain additional covenants that restrict the activities of our operating subsidiaries, such as the incurrence of additional indebtedness and liens and the payment of dividends and other payments. In addition, the terms of any debt financings may require guarantees by CastlePoint Holdings or any of our subsidiaries. We currently have no commitment from any lender with respect to a credit facility. We cannot assure you that we will be able to obtain a credit facility on terms acceptable to us.

For the period commencing November 16, 2005 (date of incorporation) and ending September 30, 2006, net cash provided by operating activities was $45.0 million and net cash flows used in investing activities was $285.8 million. The primary sources of cash of our operating subsidiaries are net premiums received, commission income and investment income. Cash is used to pay commissions and operating expenses, to purchase investments and fixed assets, subject to regulatory, contractual, rating agencies and other constraints, to CastlePoint Holdings.

The net cash flows provided by financing activities for the period commencing November 16, 2005 and ending September 30, 2006 was $262.4 million, which primarily consisted of approximately $249.2 million in net proceeds, after offering and related expenses, from the private offering, dividends paid to shareholders of $1.5 million and $15.0 million invested in us by Tower.

Bermuda. Bermuda legislation imposes limitations on the dividends that CastlePoint Re may pay. Under the Insurance Act, CastlePoint Re is required to maintain a specified solvency margin and a minimum liquidity ratio and is prohibited from declaring or paying any dividends if doing so would cause CastlePoint Re to fail to meet its solvency margin and its minimum liquidity ratio. Under the Insurance Act, CastlePoint Re is prohibited from declaring or paying dividends without the approval of the BMA if CastlePoint Re failed to meet its solvency margin and minimum liquidity ratio on the last day of the previous fiscal year. Under the Insurance Act, CastlePoint Re is prohibited, without the approval of the BMA, from reducing by 15% or more its total statutory capital as set forth on its financial statements for the previous year. In addition, under the Companies Act, CastlePoint Re may not declare or pay a dividend, or make a distribution from contributed surplus, if there are reasonable grounds for believing that it is, or would after the payment be, unable to pay its liabilities as they become due, or the realizable value of its assets would be less than the aggregate of its liabilities and its issued share capital and share premium accounts.

United States. CastlePoint Insurance Company is subject to regulation by the State of New York, its state of domicile. Under New York State insurance law, CastlePoint Insurance Company may not, during any 12-month period, declare or pay dividends in excess of the lesser of 10% of its policyholders surplus as shown on its last filed financial statement or 100% of CastlePoint Insurance Company's adjusted net income during such period, without obtaining the New York State Insurance Department's prior approval. All dividends paid by CastlePoint Insurance Company may only be paid out of earned surplus.

The additional U.S. licensed insurance companies we plan to acquire will be subject to regulation by their respective states of domicile. Under most U.S. state insurance laws, prior regulatory approval is generally required for the payment of dividends or distributions which, together with any other dividends and distributions paid during the immediately preceding twelve month period exceed the greater of 10% of statutory capital and surplus or the prior calendar year's net income or net investment income. Additionally, dividends generally may only be paid out of an insurer's earned surplus.

Property and casualty insurance and reinsurance premiums are established based upon our estimates at the time of the amount of losses and loss adjustment expenses that have been incurred in the past for similar types of business. We attempt to estimate the potential impact of inflation on losses and loss adjustment expenses in establishing our premiums, but we cannot be certain about the extent to which inflation may affect such amounts. Inflation in excess of the levels we have assumed could cause losses and losses adjustment expenses to be higher than we anticipated and therefore insurance and reinsurance premiums to be inadequate.

Substantial future increases in inflation could also result in future increases in interest rates, which in turn are likely to result in a decline in the market value of the investment portfolio and produce unrealized losses.

We have no off-balance sheet arrangements or transactions with unconsolidated, special purpose entities.

Market risk is the risk that we will incur losses in our investments due to adverse changes in market rates and prices. Market risk is directly influenced by the volatility and liquidity in the market in which the related underlying assets are invested. We believe that we will be principally exposed to three types of market risk: changes in interest rates, changes in credit quality of issuers of investment securities and reinsurers, and changes in equity prices. Because some of our investments will be in small insurance companies and program underwriting agents with which we do business, such investments may have no trading market and may be illiquid.

Our credit risk is the potential loss in market value resulting from adverse change in the borrower's ability to repay its obligations. Our investment objectives are to preserve capital, generate investment income and maintain adequate liquidity for the payment of claims and debt service. We seek to achieve these goals by investing in a diversified portfolio of securities. We intend to manage credit risk through regular review and analysis of the creditworthiness of all investments and potential investments.

We also have other receivable amounts subject to credit risk. To mitigate the risk of these counterparties' nonpayment of amounts due, we will establish business and financial standards for reinsurer approval, incorporating ratings and outlook by major rating agencies and considering then-current market information. We continually review our receivables and set up an allowance for doubtful accounts when amounts are past due or when there is a possibility that an account is uncollectible.

Equity risk is the risk that we may incur economic losses due to adverse changes in equity prices. Our exposure to changes in equity prices will primarily result from our holdings of common stocks, mutual funds and other equities. Our portfolio of equity securities will be carried on the balance sheet at fair value.

Portfolio characteristics are expected to be analyzed regularly and market risk will be actively managed through a variety of modeling techniques. If we invest in equity securities, our holdings are expected to be diversified across industries, and concentrations in any one company or industry will be limited by parameters established by senior management, as well as by statutory requirements. In addition, we plan to make strategic investments, including potential acquisitions in small insurance companies and program underwriting agents with which we do business, in order to build a distribution system that sources a significant portion of our overall business from these clients. We recently purchased $40 million of non-cumulative convertible perpetual preferred stock of Tower, $30 million of which is mandatorily convertible into shares of Tower's common stock under certain circumstances, with the remaining $10 million convertible into shares of Tower's common stock at our option. For more information, see "Business—Strategic Investments." In certain cases, these strategic investments may have no trading market and thus may be illiquid.

Interest rate risk is the risk that we may incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities. Fluctuations in interest rates have a direct impact on the market valuation of these securities.

For fixed maturity securities, short-term liquidity needs and the potential liquidity needs for our business are key factors in managing our portfolio. We use modified duration analysis to measure the sensitivity of the fixed income portfolio to changes in interest rates.

Although we have no plans at this time to invest in floating rate securities or borrow funds at a floating rate of interest, we would also be exposed to interest rate risk on these investments or debt instruments if we were to participate in these instruments in the future.

Sensitivity analysis is a measurement of potential loss in future earnings, fair values or cash flows of market sensitive instruments resulting from one or more selected hypothetical changes in interest rates and other market rates or prices over a selected time. In our sensitivity analysis model, we select a hypothetical change in market rates that reflects what we believe are reasonably possible near-term changes in those rates. The term "near-term" means a period of time going forward up to one year from the date of the consolidated financial statements. Actual results may differ from the hypothetical change in market rates assumed in this disclosure, especially since this sensitivity analysis does not reflect the results of any action that we may take to mitigate such hypothetical losses in fair value.

In this sensitivity analysis model, we use fair values to measure our potential loss. The sensitivity analysis model includes fixed maturities and short-term investments.

For invested assets, we use modified duration modeling to calculate changes in fair values. Durations on invested assets are adjusted for call, put and interest rate reset features. Durations on tax-exempt securities are adjusted for the fact that the yield on such securities is less sensitive to changes in interest rates compared to U.S. Treasury securities. Invested asset portfolio durations are calculated on a market value weighted basis, including accrued investment income, using holdings as of September 30, 2006.

The following table summarizes the estimated change in fair value on our fixed maturity portfolio including short-term investments based on specific changes in interest rates as of September 30, 2006:

Change in Interest Rate	Estimated Increase (Decrease) in Fair Value ($ in thousands)		Estimated Percentage Increase (Decrease) in Fair Value
300 basis points rise	(21,398	)	(7.4	)%
200 basis points rise	(14,251	)	(4.9	)%
100 basis points rise	(7,038	)	(2.4	)%
100 basis points decline	6,516		2.2	%
200 basis points decline	12,362		4.3	%
300 basis points decline	18,150		6.3	%

For example, the sensitivity analysis model used by us produces a predicted pre-tax loss in fair value of market-sensitive instruments of $7.0 million or 2.4% based on a 100 basis point increase in interest rates as of September 30, 2006.

We anticipate that CastlePoint Re will not be licensed, accredited or otherwise approved as a reinsurer anywhere in the United States. All U.S. jurisdictions prohibit insurance companies from taking credit for reinsurance obtained from unlicensed or non-admitted insurers on their U.S. statutory financial statements without appropriate security. Therefore, insurance companies in these jurisdictions will only receive credit for reinsurance purchased from us to the extent that we provide adequate security for the reinsurance obligations. This type of security is typically provided by posting a letter of credit for the benefit of the primary insurer or through the deposit of assets into a trust fund

established for the benefit of the primary insurer in accordance with state regulation. See also a summary of recent modifications of the NAIC's recommended credit for reinsurance rules under "Regulation—U.S. Regulation—Credit for Reinsurance." Under the terms of the reinsurance agreements between CastlePoint Re and Tower's insurance companies, CastlePoint Re is required to provide security, which will be in the form of a trust fund established in accordance with the State of New York's Insurance Regulation 114 or with the applicable insurance regulations of Commonwealth of Massachusetts, to Tower's insurance companies to support reinsurance recoverables owed to these reinsureds in a form acceptable to the insurance commissioners of the State of New York and Commonwealth of Massachusetts, the domiciliary states of Tower's insurance companies. This trust arrangement permits Tower's insurance companies to take credit on their statutory financial statements for the reinsurance ceded to CastlePoint Re, either as an additional asset or as a reduction in liability. We may also be required by other clients to establish trusts or provide similar security as part of our reinsurance business. CastlePoint Re has established a trust fund in accordance with the State of New York's Insurance Regulation 114. If we are unable to provide the necessary security, insurance companies may be less willing to purchase our reinsurance products, which could have a material adverse effect on our results of operations.

In connection with posting of security as described above, CastlePoint Re will file annual statements in the states of domicile of its reinsureds, to the extent required.

Set forth below are certain of our expectations for 2007 with respect to our reinsurance and insurance segments. We caution you that these expectations may not materialize and are not indicative of the actual results that we will achieve. Many factors and future developments may cause our actual results to differ materially and significantly from the information set forth below. See "Risk Factors" and "A Warning About Forward Looking Statements."

With respect to our insurance segment, our brokerage business pooling arrangements with Tower are expected to contribute significantly to our insurance segment results. Pursuant to our brokerage business pooling agreement and the related pool management agreement with Tower, Tower will manage the brokerage business pool, and we expect that the total premiums written for the brokerage business pool will grow in 2007 approximately at the same rate as the growth rate for this business experienced by Tower over the past several years. Tower's growth rate in direct written premiums from 2003 through 2005 was approximately 49%, as calculated by us based upon the information included in the annual report on Form 10-K for the year ended December 31, 2005 filed by Tower with the SEC. In addition, we expect that the brokerage business pool will be increased by approximately $100 million as a result of Tower's acquisition of Preserver. According to the statutory annual statements for 2005 of Preserver's three operating insurance subsidiaries, in 2005, Preserver's direct written premiums were approximately $87.4 million. For 2007, we and Tower have agreed that the pooling percentage initially ceded to CastlePoint Insurance Company will be 15%. See "—Overview" above.

With respect to our reinsurance segment, our brokerage business quota share reinsurance arrangements with Tower are expected to contribute significantly to our reinsurance segment results. CastlePoint Re is expected to assume 40% of Tower's brokerage business, net of the brokerage business pooling with CastlePoint Insurance Company.

The property and casualty industry historically has been cyclical, as evidenced by the fact that the combined ratios for the industry have tended to be either good (that is, below 100% for several years in a row reflecting underwriting profitability) or poor (that is, above 100% for several years in a row reflecting underwriting unprofitability). We believe the changes in industry combined ratios are likely related to changes in overall pricing adequacy which in turn may be related to changes in capital flows into and out

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee


Common Shares, $0.01 par value	$50,000,000(1)(2)	$5,350

	Per Share	Total
Price to public	$	$
Discounts and commissions to underwriters(1)
Net proceeds (before expenses) to us
Net proceeds to selling shareholders

Common shares offered by us		shares
Common shares offered by the selling shareholders		shares
Common shares to be outstanding immediately after this offering		common shares.
Dividend policy		Our board of directors currently intends to authorize the payment of an annual cash dividend of $0.10 per common share to our shareholders of record, payable on a quarterly basis. On July 31, 2006, our board of directors authorized the payment of a quarterly dividend of $0.025 per share and a special dividend of $0.025 per share, payable on September 29, 2006 to our shareholders of record as of September 15, 2006. We paid both the quarterly dividend and the special dividend on that date. On October 31, 2006, our board of directors authorized the payment of a quarterly dividend of $0.025 per share, payable on December 29, 2006, to our shareholders of record as of December 15, 2006. Any future determination to pay dividends is at the discretion of our board of directors and is dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory, rating agency and any contractual restrictions on the payment of dividends and any other factors our board of directors deems relevant, including Bermuda and U.S. state legal and regulatory constraints.
Use of proceeds		We estimate that we will receive net proceeds from this offering of approximately $ based on an assumed initial offering price of $ , which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated expenses and underwriting discounts and commissions. We estimate our net proceeds will be $ if the underwriters exercise their over-allotment option in full. We will not receive any proceeds from the sale of common shares by the selling shareholders. We intend to use these net proceeds to further capitalize CastlePoint Re, and for general corporate purposes.
Trading		Our common shares are not currently listed on any national securities exchange or on Nasdaq. We have applied to have our common shares approved for listing on the Nasdaq Global Market under the symbol "CPHL."
Voting limitation		Our bye-laws contain a provision limiting the voting rights of any person beneficially owning, directly, indirectly or, in the case of any U.S. person (as defined in the Internal Revenue Code of 1986, or the Code) constructively or by attribution, shares with more than 9.5% of the total voting power of all shares entitled to vote at a general meeting of the shareholders of our company to 9.5% of such total voting power. The common shares owned by Tower are subject to this voting rights limitation. See "Description of Share Capital—Limitation on Voting Rights."

Number of common shares/ Percentage of total outstanding		Date of availability for resale into the public market
		Upon the effectiveness of this prospectus.
		60 days after the effective date of the registration statement of which this prospectus is a part, of which common shares, or %, are subject to volume limitations under Rule 144 under the U.S. Securities Act of 1933, as amended (the "Securities Act").
		180 days after the effective date of the registration statement of which this prospectus is a part, of which common shares, or %, are subject to volume limitations under Rule 144 under the U.S. Securities Act.

	Shares Purchased			Total Consideration
	Number	Percent		Amount	Percent		Average Price Per Share
	(in thousands, except percentages)
Tower	2,555		%	$	$	15,000		%
Other existing shareholders	23,500
Investors in this offering			%					%
Total		100.0	%		$		100.0	%

	Inception to September 30, 2006			Three Months Ended September 30, 2006
	($ in thousands)
Revenues
Earned premiums
Assumed premiums earned	$	47,390		$	27,003
Less: ceded premiums earned		—			—

Net premiums earned		47,390			27,003

Commission income		1,392			854
Net investment income		6,696			3,791
Net realized investment gains		10			7

Total revenues		55,488			31,655

Expenses
Net loss and loss adjustment expenses		25,297			13,919
Operating expenses		21,849			12,351
Interest expenses		—			—

Total expenses		47,146			26,270

Other expenses		4,605			—
Income before taxes		3,737			5,385

Federal and state income taxes		—			—

Net income	$	3,737		$	5,385

Key Measures
Return on Average Equity		2.7	%		8.0	%

	Inception to September 30, 2006		Three Months Ended September 30, 2006
	($ in thousands)
Revenues
Premiums earned
Gross premiums earned	$	47,390	$	27,002
Less: ceded premiums earned		—		—

Net premiums earned		47,390		27,002
Expenses
Loss and loss adjustment expenses
Gross loss and loss adjustment expenses		25,297		13,919
Ceded loss and loss adjustment expenses		—		—

Net loss and loss adjustment expenses		25,297		13,919
Underwriting expenses
Ceding commission expense		16,405		9,287
Other underwriting expenses		535		331

Total underwriting expenses		16,940		9,618

Underwriting profit	$	5,153	$	3,465

	Inception to September 30, 2006			Three Months Ended September 30, 2006
	($ in thousands)
Revenues
Direct commission revenue from program business	$	1,392		$	854

Total revenues		1,392			854
Expenses
Direct commission expenses from program business		1,016			617
Other insurance services expenses		1,757			1,032

Total expenses		2,773			1,649

Insurance services loss	$	(1,381	)	$	(795	)

	Total		Less Than 1 Year		1–3 Years		4–5 Years		More than 5 Years
Subordinated debentures(1)	$	100,000,000	$	—	$	—	$	—	$	100,000,000
Capital leases		—		—		—		—		—
Operating leases(2)		128,046		128,046		—		—		—
Purchase obligations		—		—		—		—		—
Loss reserves(3)		22,229,875		6,114,718		9,412,884		3,503,151		3,199,123

Total	$	122,357,921	$	6,242,764	$	9,412,884	$	3,503,151	$	103,199,123