A.M. Best Affirms Ratings of Montpelier Reinsurance Ltd. and Debt Ratings of Montpelier Re Holdings Ltd.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" 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 assigned an issuer credit rating of "bbb" to Montpelier Re Holdings Ltd. (Montpelier Re) (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) ) (Hamilton, Bermuda) and has affirmed its debt rating of "bbb" on $250 million 6.125% senior unsecured notes due 2013, as well as all debt securities filed under a $1 billion shelf registration. All ratings have a stable outlook. The ratings reflect Montpelier's superior risk-based capitalization, excellent operating results, experienced management team and solid broker relationships. Since commencing operations, 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 expanded into professional indemnity and 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 United Kingdom employers liability on an excess of loss basis. Montpelier's participation in these lines of business remains below 10% of gross written premiums. Montpelier produced a combined ratio of 78% in 2004 despite recording approximately $300 million in catastrophe losses while 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. grew to $1.8 billion at December 31, 2004. The company's success continues to be attributable to the implementation of strict underwriting and risk management controls, along with management's selectivity in writing lines  This article or section contains .The purpose of Wikipedia is to present facts, not to teach subject matter. of business with more favorable returns. Furthermore, Montpelier's underwriting is supported by the extensive use of sophisticated modeling and pricing systems. In March 2005, Montpelier Re declared and paid a $390 million special dividend to holders of common shares. A.M. Best was encouraged by management's decision to return excess capital to shareholders in anticipation of a softening market rather than deploy capital to unfamiliar lines of business. Furthermore, Montpelier Re's risk-based-capital remained in the superior range after the special dividend with both debt-to-adjusted capital and fixed charge coverage in the mid-teen range. Partially offsetting these strengths is the onset of softening in pricing for property covers, which could dampen expected returns Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: and Montpelier's expansion into select casualty lines where pricing and reserve adequacy have not been proven. Despite these concerns, A.M. Best expects Montpelier to continue to manage its capital base very conservatively within acceptable ranges to support its current ratings 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 established Bermuda entity. 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 An issuer credit rating of "bbb" has been assigned with a stable outlook to Montpelier Re Holdings Ltd. For Best's Debt Ratings, all other Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. 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 http://www.ambest.com. |
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