Bermuda-based Montpelier Re posted a first quarter profit of $74.5 million ? a decline of more than 30 percent from the $109 million in net income posted a year prior.

The fall comes amid predictions the company will see a ten percent decline in business this year given a general downturn in pricing levels.

Montpelier president and CEO Anthony Taylor said: ?Montpelier produced a satisfactory set of results this quarter. While property catastrophe losses were reasonably light, the market experienced a high frequency of large property risk excess events. Losses from the storms in the third quarter of 2004 continued to develop, notably in the case of the Japanese typhoons. Given the increased level of market loss activity, we are pleased to have generated a combined ratio of 73 percent.

?Our comprehensive income was adversely affected by unrealised losses on our fixed income portfolio, stemming from overall weakness in the bond market during the quarter.? (see Montpelier report card)

He continued: ?The April renewal season saw some modest rate improvements, particularly on Japan windstorm risks. There are early signs that Florida renewals may show improvement in pricing but the overall market continues to soften. We still expect that gross written premiums for 2005 will be lower than 2004 by at least ten percent.?

?This is very much the time for us to continue to concentrate on underwriting discipline,? he said.

Speaking on an earnings call with analysts yesterday morning, Mr. Taylor said Montpelier?s gross and net exposure to first quarter storm Erwin in northern Europe was ?a small claim for us? ? under $5 million.

Meanwhile, Montpelier?s estimate for exposure to 2004 storm activity ? including the unprecedented severity of last year?s Atlantic hurricane season and the Japanese typhoons ? was increased to $259 million from a previous estimate of $240 million.

Overall, Mr. Taylor said rates outside of the areas specified ? Japanese windstorm and early signs on Florida hurricane re/insurance ? continued to soften, even when it defied logic. A case in point was the five to ten percent pricing reduction seen on coverage for Japanese earthquake risk, despite recent activity.

Fifty percent of Montpelier?s business is property catastrophe reinsurance.

Montpelier CFO Kip Oberting told analysts a recent scaling back on capital was in line with the contraction of business opportunities Montpelier saw in this softer market.

?Following the return of approximately $390 million in capital to shareholders by way of a special dividend in the first quarter our total capital stood at $1.63 billion at the end of the period. Based on our current outlook on underwriting opportunities, we are comfortable with our capital position at this time.

?This is ample: About $225 million more than we had at the beginning of 2003. Lastly as always, I?ll repeat our mantra, we intend to let our underwriting opportunities drive our capital position.?