Bermuda-based reinsurer Montpelier Re Holdings Ltd. yesterday welcomed the lifting of the negative outlook on its credit ratings by Standard & Poor's.

Last week S&P said it was changing the outlook to stable from negative. At the same time the agency affirmed its 'BBB' counterparty credit rating on Montpelier Re Holdings and its 'A-' counterparty credit and financial strength ratings on Montpelier Reinsurance Ltd.

In last Friday's bulletin, S&P said: "The revised outlook reflects the companies' (collectively referred to as Montpelier) meaningful improvements in enterprise risk management (ERM) over the past two years. It is also based on management's reduction of the group's risk exposure to a single event after hurricanes Katrina, Rita and Wilma in 2005, which revealed a higher risk profile than expected."

The bulletin continued, "The ratings on Montpelier reflect the group's strong competitive position based on its market position and scale within the Bermudian reinsurance market, improved ERM, and strong capital adequacy.

"Offsetting these positive factors are a higher risk profile than that of its more diversified peers, good but volatile operating performance, a transitioning management team in new roles, and execution risk of its diversification strategy involving its new operating platforms."