Best Affirms FSR for Montpelier

December 7, 2005

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating (ICR) of “a-” of Montpelier Reinsurance Ltd. (Montpelier) (Hamilton, Bermuda).

Concurrently, A.M. Best has affirmed the ICR of “bbb-” and all existing debt ratings of Montpelier Re Holdings Ltd. (Montpelier Re) (NYSE: MRH – News; Hamilton, Bermuda). The ratings have been removed from under review with negative implications and assigned a negative outlook.

The affirmations follow A.M. Best’s review of Montpelier’s capitalization action plan after incurring losses from hurricanes Katrina, Rita and Wilma. This action plan includes both a reduction in the company’s risk profile and additional capital issues over the near term. The combination of these actions has stabilized Montpelier’s current ratings.

Montpelier is currently implementing a prudent underwriting strategy to better manage the potential accumulation of losses from a single large catastrophic event. However, the ratings have been assigned a negative outlook until these new strategies and risk mitigation procedures have been fully tested.

Going forward, A.M. Best will closely monitor the effectiveness of the new strategies and procedures with each catastrophic event.

The following debt rating has been affirmed:

Montpelier Re Holdings Ltd.–

“bbb-” on $250 million 6.125% senior unsecured notes, due 2013
The following debt ratings have been affirmed under the $1.0 billion shelf registration:

Montpelier Re Holdings Ltd.–

“bbb-” on senior unsecured
“bb+” on subordinated
“bb” on preferred stock
MRH Capital Trust I (guaranteed by Montpelier Re Holdings Ltd.)–

“bb” on preferred securities
MRH Capital Trust II (guaranteed by Montpelier Re Holdings Ltd.)–

“bb” on preferred securities.

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