A.M. Best Upgrades Rating of Montpelier Reinsurance Ltd.

May 28, 2003

A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) of Bermuda-based Montpelier Reinsurance Ltd. (Montpelier). The rating outlook is stable.

The action reflects the company’s superior operating results in its first year of operation, which stem from the development and successful implementation of strict underwriting and risk management controls and development of a strong broker distribution network. Additionally, Montpelier maintains excellent capitalization with almost $1.4 billion of shareholders equity at March 31, 2003, and has a highly experienced management team.

Montpelier produced a combined ratio of 67 percent in 2002 while benefiting from higher market rates, light catastrophes and an unencumbered balance sheet. The company’s strategy of operating with a relatively small staff from a Bermuda only platform was successful in its first year, as Montpelier developed strong underwriting and financial controls along with a lower expense environment.

Montpelier successfully completed a public offering in October 2002, issuing approximately 11.0 million shares and raising $201 million. Montpelier was originally formed in late 2001 in response to the market dislocation in the global insurance and reinsurance markets following the events of Sept. 11 through a private placement equity offering led by White Mountains and several private equity funds.

The company has adhered to its original business plan focusing on short-tail property business at higher attachment points. Business is diversified by line and geographically and includes: property risk excess of loss, property pro-rata, property catastrophe excess of loss and qualifying quota share business with select Lloyd’s syndicates.

Partially offsetting these strengths is potential market pressure on pricing, which could dampen expected returns, and exposure to low frequency high severity property catastrophe losses.

A.M. Best will continue to closely monitor Montpelier’s operations and performance.

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