Montpelier Reinsurance Ltd. and Montpelier US Insurance Co. have been affirmed a financial strength rating (FSR) of A- (excellent) and issuer credit ratings

Concurrently, Best has affirmed the ICR of "bbb-" and all debt ratings of Montpelier Re Holdings Ltd. The outlook for all ratings is stable.

These rating actions reflect Montpelier's excellent risk-adjusted capitalisation, adequate operating performance and enhanced risk management framework, said the ratings agency.

Partially offsetting these strengths, said Best, is Montpelier's susceptibility to high severity losses, which is inherent in a global property catastrophe reinsurer. Additionally, these strengths are tempered by the start-up nature of the affiliated US and UK operating platforms.

Best said that the stable outlook reflects the expectation that Montpelier Re's future performance should benefit from the current operating environment in its property focused book of business and the newer operating platforms will begin to be accretive to overall returns.

Montpelier Re produced solid returns in 2006 and 2007, which enabled its balance sheet to withstand the challenges faced during 2008, it added. While 2008 resulted in negative return measures due in part to sizable realised and unrealised investment losses, the company's risk management and strength of its balance sheet kept the impact of these challenges to a controllable level.

Furthermore, Best said that risk management initiatives implemented in recent years to help contain Montpelier Re's risk profile have proven to be effective as evidenced by the manageable level of incurred losses from the Atlantic hurricanes during 2008.