Montpelier Re — Q4 2011 Earnings Presentation
26 slides from Montpelier Re's earnings presentation, Mar 5, 2012
Slide 1: Investor Update Fourth Quarter 2011
Investor Update Fourth Quarter 2011 Investor Presentation March 2012
Slide 2: Forward Looking Statements & Safe Harbor
Forward Looking Statements & Safe Harbor Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995: This presentation contains, and Montpelier Re may from time to time make, written or oral “forward-looking” statements within the meaning of the United States federal secu
Slide 3: Highlights
Highlights We are a recognized global leader with a specialty focus on property catastrophe and short-tail reinsurance 3 Focused approach: leading provider of short-tail reinsurance and other specialty lines Cutting-edge Cat modeling: proprietary CATM pricing and risk management tools provide compet
Slide 4: Overview
2011 NPW: $624 million Leading provider of short-tail reinsurance and other specialty lines Majority of products are originated through independent brokers NYSE listed (“MRH”) with a market capitalization of $1.1 billion Total capital of $1.88 billion 4 65% US, 35% International Recognized industry
Slide 5: Competitive Positioning
Competitive Positioning Focused on short-tail reinsurance, the most attractively priced segment of the market 5 Source: Company filings, SNL as of 12/31/11. Note: Size of bubbles representative and indicative of Common Equity. 5
Slide 6: Sharpened Underwriting Focus
6 Original operating platform formed in late 2001 Catastrophe center of excellence Team of 20 underwriters & risk analysts Strong broker and cedant relationships Operations in UK, Switzerland and U.S. Established market player Strong broker and cedant relationships Benefits from Lloyd’s rating and l
Slide 7: Historical Underwriting Performance
Historical Underwriting Performance Strong underwriting track record 7 Net Premiums Written and GAAP Combined Ratio MRH 6-yr. Avg. Combined Ratio: 81% Peer 6-yr Avg. Combined ratio: 87% Selected Peer Group: Platinum, Validus, Partner, Everest, Renaissance, Transatlantic, Flagstone
Slide 8: Combined Ratio vs. Peers
Combined Ratio vs. Peers Three Years Ending Dec 2011 8 Six Years Ending Dec 2011 Strong underwriting performance relative to peers
Slide 9: Creating Shareholder Value
13.6% annualized growth in fully converted book value per share inclusive of dividends since December 2005 9 Creating Shareholder Value 13.3% return since Dec 2005[1] [1] – Annualized growth in fully converted tangible book value per share including dividends.
Slide 10: Book Value Growth vs. Peers
Book Value Growth vs. Peers [1] – Annualized growth in fully converted book value per share including dividends Source data – SNL, Company data Three Years Ending Dec 2011[1] Performance has been strong relative to peers 10 Six Years Ending Dec 2011[1]
Slide 11: Strong and transparent balance sheet
Strong and transparent balance sheet Strong Transparent Balance Sheet Low reserve, investment and financial leverage Conservative reserving track record Limited exposure to longer-tail reserve volatility Low reinsurance recoverables High quality, low duration investment portfolio No intangible asset
Slide 12: Stable Capital Base
Stable Capital Base ($ in millions) Stable and flexible capital base, balanced capital structure 12 Total Underwriting Capital at January 1, 2012 of $2,044 million
Slide 13: Reserving Track Record
Reserving Track Record Favorable Prior Year Reserve Development ($m) Prudent reserving track record 13 Annual review of reserve adequacy is performed by an independent actuarial firm
Slide 14: Conservative Investment Portfolio
Conservative Investment Portfolio High quality, liquid investment portfolio 12/31/11 Total: $2,886 million* 14 Investments Total cash and invested assets of $2.9bn Short duration, high quality investment portfolio Average portfolio rating of AA- (S&P) 2.5 year average duration 80% of portfolio is li
Slide 15: Enterprise Risk Management
Enterprise Risk Management 15 We take risks we understand Property cat leader Focus on short-tail reinsurance We avoid risks we don’t understand Financial guarantee, Finite, Life, Extended warranty Strong risk culture Industry leading Cat models Daily underwriting meetings CEO former CRO and Chief A
Slide 16: Catastrophe Losses vs. Peers
2008 Cats Recent Cat losses illustrate the significant reduction in risk profile since 2005 (zonal limits and PMLs reduced significantly) All losses have been consistent with our internal expectations Demonstrates conservative reserving vs. peers 2008 Cats includes Ike and Gustav; 2010 Cats includes
Slide 17: Net Impact from Single Event Losses by Return Period
Net Impact from Single Event Losses by Return Period 17 ($ in millions) A “100-year” return period can also be referred to as the 1.0% occurrence exceedance probability (“OEP”) meaning there is a 1.0% chance in any given year that this level will be exceeded. A “250-year” return period can also be r
Slide 18: Net Reinsurance Treaty Limits by Zone
Net Reinsurance Treaty Limits by Zone U.S. Hurricane U.S. Earthquake European Windstorm Other 18 ($ in millions) (1) “New Madrid” includes Missouri, Tennessee, Arkansas, Illinois, Kentucky, Indiana, Ohio and Michigan; Enhanced Cat Exposure Disclosure in 2012
Slide 19: Reaction to New Cat Exposure Disclosure
Reaction to New Cat Exposure Disclosure Barclays, Jay Gelb - “MRH provided new disclosures of its property reinsurance treaty exposure by catastrophe zone, which shows the company's total exposure to large catastrophes is manageable. We commend MRH for this enhanced disclosure and recommend other re
Slide 20: Well Positioned for 2012 and Beyond
Well Positioned for 2012 and Beyond Sharper Underwriting focus Enhanced Competitive Profile In 2011 we undertook a number of important strategic initiatives to position us well for 2012 and beyond 20 Sale of non-core business (MUSIC) in September 2011 Acquisitions of renewal rights (Torus) in August
Slide 21: Key Takeaways
Key Takeaways Well positioned for value creation: Focused strategy Strong competitive position Cutting-edge Cat pricing and portfolio optimization tools Strong risk management Strong conservative, high quality balance sheet Excellent capital adequacy and capital flexibility Improved Cat exposure dis
Slide 22: Appendix
9 MONTPELIER GROUP Appendix
Slide 23: Summary Consolidated Balance Sheets
Appendix – Summary Consolidated Balance Sheets 23 ($ millions, except per share amounts) Please see the December 31, 2011 Financial Supplement on www.montpelierre.bm for more details, including non-GAAP Financial Measures
Slide 24: Summary Consolidated Income Statements
Appendix – Summary Consolidated Income Statements 24 ($ millions, except per share amounts) Please see the December 31, 2011 Financial Supplement on www.montpelierre.bm for more details, including non-GAAP Financial Measures
Slide 25: Consolidated Investment Portfolio
Appendix – Consolidated Investment Portfolio 25 ($ millions) Please see the December 31, 2011 Financial Supplement on www.montpelierre.bm for more details, including non-GAAP Financial Measures
Slide 26: Contact information
Please visit our website for more information about our company, products and team members: www.montpelierre.bm Street Address: Montpelier House, 94 Pitts Bay Road Pembroke, Bermuda Mailing Address: PO Box HM 2079 Hamilton, Bermuda, HMHX Contact Name: William (Bill) Pollett, Chief Strategy and Devel
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