A.M. Best Affirms Rating of Montpelier Reinsurance Ltd. and Debt Ratings of Montpelier Re Holdings Ltd.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--May 25, 2004 A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Montpelier Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Ltd. (Montpelier) (Hamilton, Bermuda). Concurrently, A.M. Best has affirmed the debt rating of "bbb" on $250 million 6.125% senior unsecured notes due 2013 for Montpelier Re Holdings Ltd. NYSE NYSE See: New York Stock Exchange :MRH MRH Memory Repeater Hub MRH Main Rotor Head (helicopters) MRH Multi-Resolution Homogenization MRH Mastic Roller Hybrid MRH Mataillos Rejuntaos de Hafen (MMO gaming guild) ), as well as all debt securities filed under the $1.0 billion shelf registration. The outlook for all ratings is stable. The ratings reflect Montpelier's superior risk based capitalization, excellent operating results, experienced management team and solid broker relationships. Since commencing operations in 2001, the company has established a diversified book of business focusing on property risk excess of loss, property pro-rata, property catastrophe, aviation liability, marine and personal accident catastrophe coverages. In 2004, Montpelier plans to expand into professional indemnity casualty reinsurance, primarily medical malpractice Improper, unskilled, or negligent treatment of a patient by a physician, dentist, nurse, pharmacist, or other health care professional. and errors and omissions errors and omissions n. short-hand for malpractice insurance which gives physicians, attorneys, architects, accountants and other professionals coverage for claims by patients and clients for alleged professional errors and omissions which amount to negligence. (E&O) on an excess of loss basis. A.M. Best anticipates that Montpelier's participation in casualty reinsurance lines will not exceed 10% of gross premiums. Montpelier produced a combined ratio of 51% in 2003, and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. has grown to $1.8 billion at March 31, 2004. The company's success is attributable to favorable market rates, light catastrophes and an unencumbered Unencumbered Property that is not subject to any creditor claims or liens. Notes: For example, if a house is owned free and clear (meaning the owner owes no mortgage to anyone), it is unencumbered. balance sheet, along with the implementation of strict underwriting and risk management controls. Montpelier's strategy of operating with a relatively small staff from a Bermuda-only platform allows it to be opportunistic and to selectively write lines of business with more favorable returns. Furthermore, its underwriting is supported by the extensive use of sophisticated modeling and pricing systems. Montpelier's debt-to-adjusted capital is expected to remain in the mid- 20% range with fixed charge coverage sustained in the high single-digit range. The company's existing senior note offering was used to support additional growth in the operating company operating company A business that engages in transactions with outsiders. . A.M. Best anticipates that any issuance under the current shelf registration will be used judiciously to support additional growth and financial flexibility. Partially offsetting these strengths is the onset of softening in pricing for property covers, which could dampen expected returns, combined with external pressure from its original sponsors and shareholders to maintain double-digit returns on equity. Furthermore, Montpelier's short operating history has not fully tested management's underwriting expertise and risk management capabilities relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc low frequency high severity property catastrophe losses. Despite these concerns, A.M. Best expects Montpelier to continue to manage its capital base very conservatively, within acceptable ranges to support its current financial strength rating and meet the more stringent capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for a newly establish Bermuda start-up entity. A.M. Best will continue to closely monitor the company's operations and performance. The following debt rating has been affirmed: Montpelier Re Holdings Ltd.-- -- "bbb" on $250 million 6.125% senior unsecured notes, due 2013 The following debt ratings have been affirmed under the $1.0 billion shelf registration: Montpelier Re Holdings Ltd.-- -- "bbb" on senior unsecured -- "bbb-" on subordinated -- "bb+" on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. MRH Capital Trust I (guaranteed by Montpelier Re Holdings Ltd.)-- -- "bb+" on preferred securities For current Best's Ratings, independent data and analysis on more than 470 reinsurance companies, please visit http://www.ambest.com/reinsurance/. For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debtratings/. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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