We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

  MONTPELIER RE HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share and per share amounts)
unaudited
                 
  September 30, December 31,
      2012       2011
Assets  
 
Fixed maturity investments, at fair value $ 2,697.6 $ 2,390.2
Equity securities, at fair value 40.9 96.1
Other investments 102.2 102.4
Cash and cash equivalents 414.3 340.3
Restricted cash   100.8         128.4  
 
Total Investments and Cash 3,355.8 3,057.4
 
Reinsurance recoverable on unpaid losses 80.2 77.7
Reinsurance recoverable on paid losses 5.3 7.7
Insurance and reinsurance premiums receivable 287.9 213.4
Unearned reinsurance premiums ceded 47.6 22.0
Deferred insurance and reinsurance acquisition costs 54.2 50.9
Accrued investment income 15.7 16.2
Unsettled sales of investments 181.4 33.9
Other assets   21.4         20.3  
 
Total Assets   $ 4,049.5       $ 3,499.5  
 
Liabilities
 
Loss and loss adjustment expense reserves $ 1,039.4 $ 1,077.1
Debt 327.9 327.8
Unearned insurance and reinsurance premiums 368.2 265.9
Insurance and reinsurance balances payable 68.9 44.0
Liability for investment securities sold short 153.4 136.3
Unsettled purchases of investments 375.5 69.9
Accounts payable, accrued expenses and other liabilities   42.2         29.2  
 
Total Liabilities   2,375.5         1,950.2  
 
Shareholders’ Equity
 
Non-cumulative preferred shares 150.0 150.0
Common shares and additional paid-in capital 1,075.2 1,165.7
Common shares held in treasury, at cost (30.2 ) (22.0 )
Retained earnings 482.6 259.7
Accumulated other comprehensive loss   (3.6 )       (4.1 )
 
Total Shareholders’ Equity   1,674.0         1,549.3  
 
Total Liabilities and Shareholders’ Equity   $ 4,049.5       $ 3,499.5  
 
Common and common equivalent shares outstanding:
 
Common shares outstanding (000s) 55,523 sh 60,864 sh
Common and common equivalent shares outstanding (000s) 57,264 61,625
 
 
MONTPELIER RE HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions of U.S. dollars, except per share amounts)
unaudited
                               
      Three Months Ended   Nine Months Ended
September 30, September 30,
          2012       2011       2012       2011  
   
Underwriting revenues
 
Gross insurance and reinsurance premiums written $ 127.7 $ 162.5 $ 640.9 $ 633.8
Ceded reinsurance premiums   (26.2 )     (40.9 )   (108.6 )     (91.4 )
Net insurance and reinsurance premiums written $ 101.5     $ 121.6   $ 532.3     $ 542.4  
 
Gross insurance and reinsurance premiums earned $ 183.1 $ 187.2 $ 543.3 $ 541.9
Earned reinsurance premiums ceded   (30.1 )     (31.3 )   (83.4 )     (67.5 )
Net insurance and reinsurance premiums earned 153.0 155.9 459.9 474.4
 
Underwriting expenses
 
Loss and loss adjustment expenses - current year (73.0 ) (156.7 ) (219.6 ) (562.8 )
Loss and loss adjustment expenses - prior year 15.7 18.0 61.1 71.3
Insurance and reinsurance acquisition costs (23.5 ) (26.7 ) (71.9 ) (77.7 )
Operating expenses (18.9 ) (21.2 ) (59.8 ) (66.2 )
Incentive compensation expenses (11.6 ) (2.8 ) (27.4 ) (7.3 )
                   
Underwriting income (loss)   41.7       (33.5 )   142.3       (168.3 )
 
Net investment income 15.5 17.0 50.3 51.6
Other revenue 0.1 0.2 0.8 0.3
Net realized and unrealized investment gains (losses) 33.2 (31.3 ) 78.9 (5.3 )
Net foreign exchange losses (10.8 ) (4.1 ) (10.5 ) (3.8 )
Net income (loss) from derivative instruments 0.7 (6.3 ) 4.3 (3.0 )
Interest and other financing expenses (4.7 ) (4.9 ) (14.5 ) (15.7 )
Income tax benefit (provision) (0.7 ) - (0.7 ) 0.6
                   
Net income (loss) 75.0 (62.9 ) 250.9 (143.6 )
 
Dividends declared on non-cumulative preferred shares (3.3 ) (3.3 ) (10.0 ) (5.7 )
                   
Net income (loss) available to common shareholders   $ 71.7     $ (66.2 )   $ 240.9     $ (149.3 )
 
Net income (loss) $ 75.0 $ (62.9 ) $ 250.9 $ (143.6 )
 
Net change in foreign currency translation 1.7 0.6 0.5 2.0
                   
Comprehensive income (loss)   $ 76.7     $ (62.3 )   $ 251.4     $ (141.6 )
 
Net income (loss) available to common shareholders per share   $ 1.25     $ (1.07 )   $ 4.08     $ (2.41 )
 
Insurance ratios:
 
Loss and loss adjustment expense ratio:
Current year 47.6 % 100.5 % 47.7 % 118.6 %
Prior year   -10.2 %     -11.5 %   -13.3 %     -15.0 %
Loss and loss adjustment expense ratio 37.4 % 89.0 % 34.4 % 103.6 %
Acquisition costs ratio 15.4 % 17.1 % 15.6 % 16.4 %
Operating expense ratio 12.3 % 13.6 % 13.0 % 14.0 %
Incentive compensation expense ratio   7.6 %     1.8 %   6.0 %     1.5 %
Combined ratio     72.7 %     121.5 %     69.0 %     135.5 %
 
 
MONTPELIER RE HOLDINGS LTD.
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
TO OPERATING INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS 1
(in millions of U.S. dollars)
unaudited
                           
Three Months Ended Nine Months Ended
September 30, September 30,
     

 

2012
   

 

2011
   

 

2012
   

 

2011
 
 
Net income (loss) available to common shareholders $ 71.7 $ (66.2 ) $ 240.9 $ (149.3 )
 
Add (subtract):
Net realized investment gains (14.9 ) (13.3 ) (50.5 ) (25.5 )
Net unrealized investment losses (gains) (18.3 ) 44.6 (28.4 ) 30.8
Net losses (gains) from investment-related derivative instruments 2 2.1 5.8 (0.4 ) 6.3
Net foreign exchange losses (gains) 10.8 4.1 10.5 3.8
Net losses (gains) from foreign exchange-related derivative instruments 2 (2.9 ) 0.1 (4.3 ) (4.3 )
                   
Operating income (loss) available to common shareholders $ 48.5     $ (24.9 )   $ 167.8     $ (138.2 )
 
Operating income (loss) available to common shareholders per share $ 0.85     $ (0.40 )   $ 2.84     $ (2.23 )
 
MONTPELIER RE HOLDINGS LTD.
BOOK VALUE PER COMMON SHARE 1
unaudited
                           
Sept. 30, June 30, Dec. 31, Sept. 30,
        2012       2012       2011       2011  
Book value per share numerators (in millions of U.S. dollars):
 
Shareholders' equity $ 1,674.0 $ 1,624.7 $ 1,549.3 $ 1,550.4
 
less: Non-cumulative preferred shares   (150.0 )   (150.0 )     (150.0 )     (150.0 )
 
[A] Book value per common share numerator (common shareholders' equity) 1,524.0 1,474.7 1,399.3 1,400.4
 
Intangible asset 3   -     -       -       (4.8 )
 
[B] Fully converted tangible book value per common share numerator $ 1,524.0   $ 1,474.7     $ 1,399.3     $ 1,395.6  
 
Book value per share denominators (in thousands of common shares):
 
[C] Common shares outstanding 55,523 56,562 sh 60,864 sh 61,585 sh
 
Restricted share units outstanding   1,741     1,588       761       1,336  
 
[D] Fully converted book value per common share denominator   57,264     58,150   sh   61,625   sh   62,921   sh
 
Book value per common share [A] / [C] $ 27.45 $ 26.07 $ 22.99 $ 22.74
Fully converted book value per common share [A] / [D] 26.61 25.36 22.71 22.26
Fully converted tangible book value per common share [B] / [D] 26.61 25.36 22.71 22.18
 

Change in fully converted tangible book value per common share: 4
 
From June 30, 2012 5.3 %
From December 31, 2011 18.6 %
  From September 30, 2011     22.0 %                  
 

1
These measures constitute "non-GAAP financial measures" as defined in Regulation G and as further described herein.

2
Represents the portion of our net income or expense from derivative instruments that constitute investment and foreign exchange gains and losses.

3
Represents the value of excess and surplus lines licenses and authorizations we acquired in 2007. We realized the full value of this asset
in connection with our December 2011 sale of Montpelier U.S. Insurance Company

4
Computed as the change in fully converted tangible book value per common share after taking into account common dividends declared of $0.105, $0.315 and
$0.42 during the three, nine and twelve month periods ended September 30, 2012, respectively.

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