Montpelier Re Reports $99.9 Million Q4 Net; $407.1 Million Full Year

February 13, 2004

Montpelier Re Holdings Ltd. reported net income of $99.9 million, or $1.46 diluted earnings per share, for the three months to December 31, 2003 and net income of $407.1 million, or $6.05 diluted earnings per share, for 2003.

The announcement said “The change in net unrealized gains on investments was $11.7 million for the quarter and $18.2 million for the year. Comprehensive income was $111.6 million, or $1.63 diluted comprehensive income per share, for the quarter and $425.3 million, or $6.32 diluted comprehensive income per share, for the year.”

The company, which is part of the White Mountains Group, recorded an increase in book value of $1.20 or 5.1 percent in the fourth quarter bringing the total book value to $24.92-an increase of $5.53 or 28.5 percent in the twelve months to December 31, 2003. “Total return to shareholders, incorporating both the increase in fully converted book value per share and dividends paid or payable, was 6.5 percent for the quarter and 30.3 percent for the year,” said the bulletin.

President and CEO Anthony Taylor commented: “I am delighted to be reporting another remarkable set of results. To achieve a total return to shareholders of thirty percent in only our second year of operations is a testament to our focused business plan, our talented team of underwriters, the strength of our modeling techniques and the high standards of service that we offer to our clients. We believe these results support our key philosophy, namely that underwriting discipline, above all, is the key to achieving favorable results over the long term.

“The January renewal season has been very encouraging. Despite enjoying two of the best underwriting years on record, we have seen a remarkably small reduction in unit price across the spread of our portfolio, and rate levels for 2004 continue to offer the prospect of very good returns. Montpelier is increasingly recognized as a key player in the reinsurance market and this has manifested itself in both increased showings of business on all classes in the January 2004 renewal season and an increase in our average line size,” he added.

Tom Kemp, Chief Financial Officer, noted: “Throughout all four quarters of 2003, Montpelier has produced extremely consistent, high quality results in terms of both combined ratio and return on equity. We are particularly pleased with the results in our non-catastrophe property and other specialty classes, which have performed exceptionally well throughout the year. Our property catastrophe portfolio has also produced very good results, despite a considerable level of loss activity in the industry, most notably in the second half of the year.”

He added that the company was “pleased to announce the commencement of a regular dividend program during the fourth quarter. The dividend of $0.34 per share per quarter represents a significant cash yield for our shareholders, and also reflects our confidence in our ability to generate strong earnings and cash flows in the future.”

The company said “Gross premiums written and net premiums earned were in line with expectations, except for reinstatement premium which was lower than expected in the fourth quarter due to favorable loss experience, maintaining the trend seen throughout 2003.

“In 2003, the total investment return including realized and unrealized gains was 4.0%. Equities comprised 5.5% of total investments and cash, including the holding in Aspen Insurance Holdings Ltd. which successfully completed its Initial Public Offering in the fourth quarter.

“The loss ratio for the fourth quarter was 27.9 percent and the loss ratio for the year was 23.3 percent. In the fourth quarter, 2002 accident year net reserves totaling $13.2 million were released, which reduced the loss ratio in the quarter by 7.2 percent.” After calculating administrative and related expenses the company achieved a combined ratio of 55.4 percent and 50.3 percent for the quarter and year, respectively.

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