Montpelier Re Unaffected By Dividend

Standard & Poor’s Ratings Services said its ratings on Montpelier Reinsurance Ltd. of “A” (positive) and Montpelier Re Holdings Ltd. “BBB” (positive) are unaffected by Montpelier’s declaration of a $390 million special dividend payable on March 31, 2005, to shareholders of record on March 15, 2005.

Montpelier’s year-end 2004 capital adequacy–incorporating an exposure-based charge for property catastrophe risks as of Jan. 2005–was about 200 percent, which was well in excess of S&P’s expectation that Montpelier maintain capital above 160 percent. Montpelier’s use of a special nonrecurring dividend as a tool to manage capital within rating expectations is viewed as an appropriate capital-management methodology and consistent with the current rating and outlook.

The ratings on Montpelier reflect its market position and scale within the Bermuda reinsurance market, strong operating performance and strong financial flexibility. The company’s capital adequacy is also viewed as a strength. Offsetting these factors are Montpelier’s limited track record, concentrated management team and high risk for catastrophe losses.

The positive outlook reflects S&P’s increased confidence level that Montpelier has made strides in establishing a successful track record as a successful property catastrophe reinsurance company since its inception in 2002. This success is demonstrated in Montpelier’s operating performance in 2004 and in the January 2005 renewals.