Montpelier Re Reports Strong Third Quarter Financial Results (Excerpt)

Hamilton, Bermuda – 04 November, 2010 - Montpelier Re Holdings Ltd. (“Montpelier” or the “Company”; Ticker: MRH.BH),  a leading provider of short-tail reinsurance and other specialty lines, has reported financial results for the third quarter ended 30 September, 2010.

·         Fully Converted Book Value Per Share of $23.76, a 6.9% increase from 30 June, 2010

·         Operating EPS of $0.86, up 25% year on year

·         Net Premiums Written Up 13%, driven by Lloyd's and MUSIC Platforms

·         $42 million of shares repurchased in the quarter

Fully converted book value per share was $23.76, an increase of 6.9% for the quarter and 13.7% for the year to date, including dividends.

Operating income was $0.86 per share ($61 million) and comprehensive income was $1.28 per share ($91 million). The net impact of realized and unrealized gains from investments and foreign exchange, which is included in comprehensive income, was $30 million.

Net written premiums grew by 13% compared to the third quarter of 2009 with growth in the Company’s Lloyd’s and US operations more than offsetting a decrease in the Bermuda property catastrophe book.

The loss ratio was 33%, which includes 8 points ($12 million) of loss resulting from the New Zealand earthquake and 5 points ($9 million) from large risk losses. The quarter benefited from 14 points ($21 million) in favorable releases from prior years’ loss reserves. The combined ratio was 69% versus 66% a year ago.

Net investment income was down 7% from a year ago at $19 million. The total return on the investment portfolio was 1.8% for the quarter and 4.9% year to date.

Christopher Harris, President and Chief Executive Officer, said, “We produced another strong quarter in the face of challenging market conditions with solid underwriting results, steady investment performance and active capital management all contributing to the 6.9% growth in fully converted book value per share. While the September earthquake in New Zealand was a large industry event, our loss was well within our internal expectations and reflects our relative underweighting in this region of the world.”

He added, “We continue to be pleased with the development of Syndicate 5151, both in terms of underwriting results and the strong market support it has attracted. Looking ahead to 2011, our group capital base is at the high end of the range required to support our underwriting plans, and share repurchases remain a compelling option as part of our ongoing cycle management strategy.”

Montpelier repurchased 2,634,000 shares during the third quarter at an average price of $15.90. The Company repurchased a further 1,573,000 shares in October and November at an average price of $17.81. During the year to date period, the Company repurchased a total of 13,652,400 shares at an average price of $17.96.

Please refer to Montpelier’s September 30, 2010 Financial Supplement for more detailed financial information, which is posted on the Company’s website at www.montpelierre.bm

Earnings Conference Call:

The Company conducted a conference call, including a question and answer period, on Wednesday, 3 November, 2010 at 8:00 a.m. Eastern Time.

A telephone replay of the conference call will be available through 11 November, 2010 by dialing 1-877-344-7529 (toll-free) or 1-412-317-0088 (international) and entering the passcode 444417.

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

(2)  Fully converted book value per share at 30 September, 2010 is based on shareholders' equity of $1,668.4 million divided by 70,235,192 common shares (consisting of 68,258,453 shares outstanding plus 1,976,739 shares issuable upon conversion of outstanding share equivalents). Fully converted book value per share at 30 June, 2010 is based on shareholders' equity of $1,621.4 million divided by 72,688,939 common shares (consisting of 70,888,952 shares outstanding plus 1,799,987 shares issuable upon conversion of outstanding share equivalents). Fully converted book value per share at 31 December, 2009 is based on shareholders' equity of $1,728.5 million divided by 81,767,564 common shares (consisting of 79,998,795 shares outstanding plus 1,768,769 shares issuable upon conversion of outstanding share equivalents).

(3)  The return for the year-to-date period represents the increase in fully converted book value per share from 31 December, 2009 ($21.14) to 30 September, 2010 ($23.76), after giving effect to dividends totalling $0.27 per share. The return for the quarter represents the increase in fully converted book value per share from 30 June, 2010 ($22.31) to 30 September, 2010 ($23.76), after giving effect to a dividend of $0.09 per share.

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

Contacts

Montpelier Re Holdings Ltd.
Investors:
William Pollett, Treasurer & SVP, 441-299-7576
or
Media:
Jeannine Menzies, Corporate Affairs Manager, 441-299-7570