Montpelier Re Notes Net Income of $109 Million During Q1 Report

April 28, 2004

Bermuda-based Montpelier Re Holdings Ltd. reported net income of $109.0 million, or $1.59 diluted earnings per share, through March 31, 2004. The change in net unrealized gains on investments was $25.9 million for the quarter and comprehensive income was $134.9 million, or $1.96 diluted comprehensive income per share.

Book value per share at March 31, 2004, on a fully converted basis (1), was $26.44, which includes the accrual of a $0.34 dividend per share for the quarter. Total return to shareholders (2), incorporating both the increase in fully converted book value per share and dividends accrued, was 30.3% for the 12 months ended March 31st 2004 and 7.5% for the first quarter of 2004.

Anthony Taylor, Chairman, president and CEO, commented, ‘Montpelier had a successful January renewal season. The range and quality of business we have seen continues to improve as the reputation of our underwriting and risk management skills develops, leading to further growth in our core lines of business. Offset against these improvements is a small overall decline in rates on renewed business, and our disciplined approach to program selection has resulted in a rise in the number of risks we have declined. We will continue to put underwriting discipline first and foremost, as we believe it is the most important element in producing superior long-term results for owners.

“April renewal season saw a continued healthy showing of business. Overall in the lines of business we write, at the layers we tend to participate in, rates remain favorable. Notwithstanding modest reductions in certain classes, based on our current expectations on prices and terms, we remain confident that we will experience an increase in gross written premium in 2004 over 2003 despite the planned non-renewal of the Lloyd’s QQS business.”

Tom Kemp, CFO, added, “Our results in the first quarter of 2004 continue the pattern of outstanding returns in 2002 and 2003. Our combined ratio was 50.1% in the quarter, compared to 52.8% in the first quarter in 2003. Continuing lines of business experienced premium growth of 14.4% and our net earned premium was $190.8 million in the first quarter of 2004, compared to $184.7 million for the same period in 2003. Gross written premium was $333.2 million in the quarter, down from $366.6 million in the first quarter of 2003 which largely reflects the non-renewal of the Lloyd’s QQS programs in 2004. Should results continue to be strong, we will manage our capital with a view to meeting our target rate of return to shareholders over the cycle.”

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