Montpelier Re Reports Net Income of $148 Million for the 2009 Third Quarter and a 9.6% Increase in Fully Converted Book Value Per Share to $19.78

November 3, 2009 4:05 PM EST

HAMILTON, Bermuda--(BUSINESS WIRE)-- Montpelier Re Holdings Ltd. (NYSE: MRH); (the "Company") reported operating income of $62 million ($0.71 per share) for the third quarter and $178 million ($2.03 per share) for the nine months ended September 30, 2009.

The Company reported net income of $148 million ($1.68 per share) for the third quarter and $359 million ($4.11 per share) for the nine months ended September 30, 2009. Realized and unrealized gains on investments and foreign exchange, which are included in net income, were $87 million for the quarter and $176 million year-to-date.

Fully converted book value per share was $19.78 at September 30, 2009, an increase of 9.6% for the quarter and 25.5% from December 31, 2008, inclusive of dividends. The Company repurchased 1,178,097 shares in September at an average price of $16.26 per share and a further 1,460,904 shares in October at an average price per share of $17.11.

The combined ratio was 66.3% for the quarter and 67.1% for the nine months ended September 30, 2009. The third quarter 2009 loss ratio totaled 29.0%, which includes 13.5 points ($19.4 million) in favorable releases from prior years' loss reserves.

Chris Harris, President and Chief Executive Officer, said, "We produced an excellent quarterly result with a low loss ratio and solid investment results leading to 9.6% growth in our fully converted book value per share. Net written premiums grew by 16% for the quarter due to strong property catastrophe rate levels and increased opportunities in our Lloyds' and U.S. operations. In light of the strong growth in our capital base since the beginning of year, we resumed our share repurchase program in September and have deployed a portion of that increased capital in a manner that is accretive to our book value per share."

Please refer to our September 30, 2009 Financial Supplement for more detailed financial information, which is posted on our website at www.montpelierre.bm.

(1) Operating income is a non-GAAP financial measure which represents net income excluding net investment and foreign exchange gains and losses, income taxes, gain on early extinguishment of debt and extraordinary items.

(2) Fully converted book value per share at September 30, 2009 is based on shareholders' equity of $1,722.2 million divided by 87,049,692 common shares (consisting of 85,208,223 shares outstanding plus 1,841,469 shares issuable upon conversion of outstanding share equivalents). Fully converted book value per share at June 30, 2009 is based on shareholders' equity of $1,597.0 million divided by 88,148,305 common shares (consisting of 86,383,542 shares outstanding plus 1,764,763 shares issuable upon conversion of outstanding share equivalents). Fully converted book value per share at December 31, 2008 is based on shareholders' equity of $1,357.6 million divided by 85,188,323 common shares (consisting of 91,826,704 shares outstanding, less 7,920,000 shares subject to our former share issuance agreement, plus 1,281,619 shares issuable upon conversion of outstanding share equivalents).

(3) The return for the quarter represents the increase in fully converted book value per share from June 30, 2009 ($18.12) to September 30, 2009 ($19.78), after giving effect to a dividend of $0.075 per share. The return for the nine month period represents the increase in fully converted book value per share from December 31, 2008 ($15.94) to September 30, 2009 ($19.78) after giving effect to dividends of $0.225 per share.

Earnings Conference Call:

The Company will conduct a conference call, including a question and answer period, on Wednesday, November 4, 2009 at 8:00 a.m. Eastern Time.

The presentation will be available via a live audio webcast accessible on the Company's website at www.montpelierre.bm or by dialing 1-800-860-2442 (toll free) or 1-412-858-4600 (international). A telephone replay of the conference call will be available through December 4, 2009 by dialing 1-877-344-7529 (toll-free) or 1-412-317-0088 (international) and entering the passcode 433731.

The Company, through its operating subsidiaries, is a premier provider of global property and casualty reinsurance and insurance products. Additional information can be found in Montpelier's public filings with the Securities and Exchange Commission.

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

This earnings release contains forward-looking statements within the meaning of the United States (the "U.S.") federal securities laws, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that are not historical facts, including statements about our beliefs and expectations. These statements are based upon current plans, estimates and projections. Forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and various risk factors, many of which are outside the Company's control, that could cause actual results to differ materially from such statements. See "Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission. In particular, statements using words such as "may," "should," "estimate," "expect," "anticipate," "intend," "believe," "predict," "potential," or words of similar import generally involve forward-looking statements.

Important events and uncertainties that could cause our actual results, future dividends or future common share repurchases to differ include, but are not necessarily limited to: market conditions affecting our common share price; the possibility of severe or unanticipated losses from natural or man-made catastrophes, in particular catastrophes that are weather-related; the effectiveness of our loss limitation methods; our dependence on principal employees; our ability to execute the business plans of Syndicate 5151 and MUSIC effectively; increases in our general and administrative expenses due to new business ventures, which expenses may not be recoverable through additional profits; the cyclical nature of the reinsurance business; the levels of new and renewal business achieved; opportunities to increase writings in our core property and specialty reinsurance and insurance lines of business and in specific areas of the casualty reinsurance market and our ability to capitalize on those opportunities; the sensitivity of our business to financial strength ratings established by independent rating agencies; the inherent uncertainty of our risk management process, which is subject to, among other things, industry loss estimates and estimates generated by modeling techniques; the accuracy of estimates reported by cedants and brokers on pro-rata contracts and certain excess of loss contracts where a deposit or minimum premium is not specified in the contract; the inherent uncertainties of establishing reserves for loss and loss adjustment expenses, particularly on longer-tail classes of business such as casualty; unanticipated adjustments to premium estimates; changes in the availability, cost or quality of reinsurance or retrocessional coverage; changes in general economic and financial market conditions; changes in and impact of governmental legislation or regulation, including changes in tax laws in the jurisdictions where we conduct business; our ability to assimilate effectively the additional regulatory issues created by our entry into new markets; the amount and timing of reinsurance recoverables and reimbursements we actually receive from our reinsurers; the overall level of competition, and the related demand and supply dynamics in our markets relating to growing capital levels in the reinsurance industry; declining demand due to increased retentions by cedants and other factors; the impact of terrorist activities on the economy; rating agency policies and practices; unexpected developments concerning the small number of insurance and reinsurance brokers upon whom we rely for a large portion of revenues; our dependence as a holding company upon dividends or distributions from our insurance and reinsurance operating subsidiaries; and the impact of foreign currency fluctuation.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

MONTPELIER RE HOLDINGS LTD.

CONSOLIDATED BALANCE SHEETS

(in millions of U.S. dollars, except share and per share amounts)

unaudited

                                               September 30,     December 31,

                                               2009              2008

 Assets

 Fixed maturity investments, at fair value     $ 2,228.4         $ 1,706.6

 Equity securities, at fair value                156.4             242.3

 Other investments                               85.5              148.3

 Cash and cash equivalents                       214.1             260.9

 Restricted cash                                 35.9              7.1

 Total investments and cash                      2,720.3           2,365.2

 Reinsurance recoverable on unpaid losses        78.7              122.9

 Reinsurance recoverable on paid losses          42.6              36.4

 Premiums receivable                             223.4             168.5

 Unearned premium ceded                          18.0              20.8

 Deferred acquisition costs                      45.0              28.4

 Accrued investment income                       15.5              14.0

 Unsettled sales of investments                  13.4              1.4

 Other assets                                    49.0              40.0

 Total Assets                                  $ 3,205.9         $ 2,797.6

 Liabilities

 Loss and loss adjustment expense reserves     $ 719.0           $ 808.9

 Debt                                            331.7             352.5

 Unearned premium                                299.5             185.2

 Insurance and reinsurance balances payable      35.9              43.8

 Unsettled purchases of investments              11.5              3.1

 Accounts payable, accrued expenses and other    86.1              46.5
 liabilities

        Total Liabilities                        1,483.7           1,440.0

 Common Shareholders' Equity

 Common shares and additional paid-in capital    1,634.2           1,599.2

 Treasury shares, at cost                        (35.7)            (23.8)

 Retained earnings (deficit)                     124.9             (214.6)

 Accumulated other comprehensive loss            (1.2)             (3.2)

        Total Common Shareholders' Equity        1,722.2           1,357.6

 Total Liabilities and Common Shareholders'    $ 3,205.9         $ 2,797.6
 Equity

 Common shares outstanding (000s) 1              85,208      sh    83,907     sh

 Common and common equivalent shares             87,050            85,188
 outstanding (000s) 1

 Book value per share:

 Book value per share                          $ 20.21           $ 16.18

 Fully converted book value per share            19.78             15.94

 Fully converted tangible book value per         19.73             15.88
 share

1 Common shares outstanding at December 31, 2008 exclude 7,920,000 shares
subject to a share issuance agreement which were not dilutive to our
calculations of book value per share at that date. This agreement was terminated
in February 2009.

MONTPELIER RE HOLDINGS LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in millions of U.S. dollars, except per share amounts)

unaudited

                              Three Months Ended Sept.  Nine Months Ended Sept.
                              30,                       30,

                              2009      2008            2009       2008

 Underwriting revenues

 Gross premiums written       $ 120.8   $ 103.0         $ 555.8    $ 547.5

 Reinsurance premiums ceded     (14.5)    (11.3)          (27.8)     (79.8)

 Net premiums written         $ 106.3   $ 91.7          $ 528.0    $ 467.7

 Gross premiums earned        $ 152.9   $ 155.0         $ 450.4    $ 451.9

 Earned reinsurance premiums    (9.3)     (20.8)          (32.0)     (58.2)
 ceded

 Net premiums earned            143.6     134.2           418.4      393.7

 Underwriting expenses

 Loss and loss adjustment       (60.9)    (184.2)         (172.4)    (333.8)
 expenses - current year

 Loss and loss adjustment       19.4      23.1            51.4       71.9
 expenses - prior year

 Acquisition costs              (17.4)    (22.0)          (60.8)     (62.3)

 General and administrative     (36.2)    (17.7)          (99.1)     (71.3)
 expenses

 Underwriting income (loss)     48.5      (66.6)          137.5      (1.8)

 Net investment income          20.2      21.4            59.7       67.8

 Other revenue                  0.1       -               0.5        1.8

 Interest and other             (6.6)     (6.4)           (19.8)     (20.2)
 financing expenses

 Other non-underwriting         -         (3.0)           (0.2)      (8.8)
 expenses

 Net income attributable to
 noncontrolling interest in     -         -               -          (1.9)
 Blue Ocean

 Operating income (loss)1       62.2      (54.6)          177.7      36.9

 Net realized investment        4.9       (27.0)          6.9        (22.0)
 gains (losses) 2

 Net unrealized investment      76.3      (48.0)          171.0      (109.2)
 gains (losses) 2

 Net foreign exchange gains     6.1       (12.6)          (1.7)      (4.4)
 (losses) 2

 Income tax provision           (2.0)     -               (1.0)      (0.1)

 Gain on early                  -         -               5.9        -
 extinguishment of debt

 Excess of fair value of
 acquired assets over cost -    -         -               -          1.0
 Blue Ocean

 Net income (loss)              147.5     (142.2)         358.8      (97.8)
 attributable to the Company

 Change in value of Symetra     0.7       0.4             0.9        (1.7)
 Financial Corporation

 Change in foreign currency     (1.0)     (0.2)           1.1        (0.1)
 translation

 Comprehensive income (loss)  $ 147.2   $ (142.0)       $ 360.8    $ (99.6)

 Earnings (loss) per share:

  Operating income (loss)     $ 0.71    $ (0.65)        $ 2.03     $ 0.43
  per share 1

  Earnings (loss) per share     1.68      (1.69)          4.11       (1.13)

  Comprehensive income          1.68      (1.69)          4.13       (1.15)
  (loss) per share

 Insurance ratios:

  Loss and loss adjustment
  expense ratio:

               Current year     42.5%     137.2%          41.2%      84.8%

               Prior year       -13.5%    -17.3%          -12.3%     -18.3%

  Loss and loss adjustment      29.0%     119.9%          28.9%      66.5%
  expense ratio

  Expense ratio                 37.3%     29.7%           38.2%      34.0%

  Combined ratio                66.3%     149.6%          67.1%      100.5%

1Excludes net investment and foreign exchange gains and losses, income taxes,
early extinguishment of debt and extraordinary items.

2Includes net gains and losses on related derivative instruments.

    Source: Montpelier Re Holdings Ltd.

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