Montpelier Re Reports $103.8 Million Q1 Net Earnings

May 1, 2003

Montpelier Re Holdings Ltd. reported net earnings of $103.8 million, or $1.56 diluted earnings per share, for the three months to March 31, 2003, compared to $18.7 million, or 36 cents per share, for the first quarter of 2002. Gross revenues rose to $202.4 million for the period, compared to $44.7 million last year. The results exceeded analysts’ consensus expectations of around $1.14 per share.

The company, which was formed by the White Mountains Insurance Group and held an initial public offering last October, said that figure includes $0.8 million of unrealized losses on investments for the quarter.

It also noted that “Book value per share at March 31, 2003, on a fully converted basis (1), was $20.81, an increase of $1.42 or 7.3% in the first quarter of 2003. Fully converted book value per share at March 31, 2002 was $16.53. Fully converted book value per share has increased $4.28 or 25.9% in the twelve months to March 31, 2003.”

President and CEO Anthony Taylor commented: “The first quarter has gone extremely well for Montpelier Re. In the areas of premium generation, program leadership, portfolio design and diversification and in the continuing enhancement of our modeling capabilities, we are very pleased at the success we believe we have achieved in 2003 so far.

“In 2003, we plan to continue to build up our planned premium levels, further diversify our portfolio of risks and to evolve as a company as the wider marketplace itself evolves. Conditions have been attractive in our business in the last 15 months and we believe we are positioning ourselves to produce favorable long-term results for our owners.”

CFO Tom Kemp noted: “We were pleased that in the first quarter of 2003, Montpelier met or exceeded its revenue projections, had encouraging results in the development of prior period reserves and in the low number of loss events in our portfolio, and did not suffer any investment impairments. Earned premiums are picking up nicely as unearned premium reserves from 2002 begin to unwind in 2003. If we continue to generate premium at our anticipated rate, earned premiums will accelerate throughout 2003. In due course, with normalized loss experience for the remainder of the year, this should produce a substantial increase in book value for our owners. As it stands at the end of the first quarter however, we are pleased with the growth in book value.

“In the year so far we have seen revenue levels at least where we anticipated they might be; however, for now, our guidance for gross written premium of between $900 and $925 million and net earned premium of between $775 and $800 million for the whole of 2003 will remain unchanged.”

Gross premiums written were $366.6 million for the quarter, an 80% increase over the same period in 2002. The company indicated that “due to the favorable loss experience, reinstatement premiums have been modestly less than expected,” while “reinsurance premiums ceded were $34.3 million, and include both reinsurance protection purchased by Lloyd’s syndicates inuring to our benefit and retrocessional cover purchased for the protection of our direct and facultative account.”

The announcement also said: “Net premiums earned were $184.7 million in the three months to March 31, 2003, a five-fold increase over the first quarter of 2002. Approximately two thirds of the earned premium relates to the 2002 underwriting year, and the remainder to business written in 2003. Net earned premium will continue to lag net written premium until the level of premium written stabilizes at a constant level year on year.” Combined ratios were 52.8% for the first quarter of 2003 compared to 68.5% for the first quarter of 2002.

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