Montpelier Re has had its financial strength rating upgraded to A (excellent) from A- by AM Best, the ratings agency announced yesterday.Best also raised the company’s issuer credit rating to “a” from “a-”, as well as upgrading the ICR of its parent company Montpelier Re Holdings Ltd from “bbb” from “bbb-”.The outlook for all ratings has been revised to stable from positive.Best said the ratings reflect Montpelier Re’s “excellent risk-adjusted capitalisation, solid long-term operating performance, diversified business profile, good competitive position, experienced management team and strong enterprise risk management framework”.Partially offsetting these strengths is the company’s susceptibility to low frequency, high severity losses as a global property catastrophe-focused reinsurer. The stable outlook reflects Montpelier Re’s overall financial flexibility, access to the capital markets and adequate rate environment in its targeted lines of business.The ratings agency added that while Montpelier Re’s business activities are concentrated in catastrophe-exposed property lines of business, its Lloyd’s platform, Syndicate 5151, provides additional diversification in terms of business mix, geographic spread and distribution capabilities.“Montpelier Re continues to follow a prudent underwriting strategy to limit the potential accumulation of losses from a single large catastrophic event,” Best commented. “Montpelier Re’s management monitors its underwriting constraints relative to capital-based limits established by its board of directors and diversifies its exposure around the world to achieve a desired optimal spread of risk.“Montpelier Re’s current financial leverage measures remain in line with its rating level. AM Best expects the company to maintain financial leverage as measured by debt and preferred-to-total capital at 25 percent or below, while fixed charge coverage for low catastrophe years is expected to remain in the low double-digit range.”