Montpelier Re Reports $91 Million Q3 Net Income

October 29, 2003

Bermuda’s Montpelier Re Holdings Ltd. reported net income of $91 million, or $1.34 diluted earnings per share, for the three months to September 30, 2003.

The company’s net income for the first nine months of 2003 was $307.3 million, or $4.58 diluted earnings per share. “The change in net unrealized gains on investments and hedging transactions was $3.1 million for the quarter and $6.5 million for the year to date,” said the bulletin. “Comprehensive income was $94.1 million for the quarter, or $1.39 diluted comprehensive income per share, and $313.8 million, or $4.67 diluted comprehensive income per share, for the first nine months of the year.”

Anthony Taylor, President and CEO commented: “Montpelier has again produced tremendous returns for our owners. Our core lines of business continue to perform strongly in 2003, with excellent growth and consistently low loss ratios. The planned expansion of our Specialty and Casualty writings is proceeding for 2004 and is attracting strong support from our key producers.

“For the nine months ended September 30, 2003, gross premiums written and net premiums earned for the core Property and Specialty lines have grown 75% and 186%, respectively, compared to the same period in 2002,” Taylor added.

“I expect that we will achieve further growth in these lines in 2004, albeit not to the same degree. Pricing and terms remain attractive and expected returns on capital employed remain very acceptable. The market is witnessing rating downgrades and continuing deterioration on back-year reserves which, when coupled with changes to industry standard modeling software, put pressure on the availability of quality capacity in the reinsurance market as we move into the renewal season,” he continued.

CFO Tom Kemp noted: “Given the high level of loss events to hit the industry in the quarter, we are very happy to be reporting such positive results. I believe that the loss ratios we have experienced are driven in large part by Montpelier’s strong underwriting focus together with our sophisticated risk management capabilities.

“Although we have grown fully converted book value by over 30% in the past twelve months, we do not believe we have had significant excess capital up this point. We see a number of opportunities where we could deploy our capital in 2004, but our required rates of return will remain high and Montpelier will not be pursuing growth for growth’s sake. Given our focus on achieving above average results for our owners, we continually explore the opportunities for maximizing shareholders’ total return. We will continue to concentrate on both the numerator and the denominator of the Return on Equity equation.”

Montpelier Re also indicated that, as it had previously announced, it does not anticipate that Lloyd’s Qualifying Quota Share contracts will be written in 2004. It does, however, expect “increased writings of core property business and growth in Other Specialty classes, as well as opportunistic participation in specific areas of the casualty reinsurance market in view of its improving terms and conditions.”

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