Montpelier Reinsurance Ltd.?s shares plummeted almost four percent yesterday after a ratings agency affirmed its A- rating but said the outlook was negative.

Montpelier, whose share price has been battered since its released higher than expected losses from the 2005 hurricane season, fell to 69 cents or 3.81 percent to $17.40.

The shares have lost 59 percent of their value from their 52-week high of $43.10 in March.

Investors were not impressed yesterday when ratings agency AM Best said affirmed Montpelier?s financial strength rating at A- but assigned it a negative outlook.

Montpelier, which sustained $972 million in claims in this year?s hurricane season, was forced to raise $620 million in new capital in September. It reported a $875 million third quarter loss in November.

In October, Best cut Montpelier?s rating from A to A-, and yesterday it also affirmed issuer credit ratings of a- for Montpelier and an ICR of ?bbb-? for all existing debt ratings.

The ratings were removed from under review with negative implications and assigned a negative outlook.

Last month Fitch Ratings agency cut Montpelier?s rating from A- to BBB. Ratings are important because some companies are restricted from doing business with reinsurers with less than an A rating.

Some existing contracts also have ?sudden-death? clauses which allow clients the ability to cancel a contract if the reinsurer is moved from an A rating to the B range.

The affirmation comes following Best?s review of Montpelier?s capitalisation action plan after incurring losses from hurricanes Katrina, Rita and Wilma.

?This action plan includes both a reduction in the company?s risk profile and additional capital issues over the near term. The combination of these actions has stabilised Montpelier?s current ratings,? Best said.

It continued: ?Montpelier is currently implementing a prudent underwriting strategy to better manage the potential accumulation of losses from a single large catastrophic event. However, the ratings have been assigned a negative outlook until these new strategies and risk mitigation procedures have been fully tested.

?Going forward, AM Best will closely monitor the effectiveness of the new strategies and procedures with each catastrophic event.?