1165880--3/1/2007--MONTPELIER_RE_HOLDINGS

related topics

{regulation, change, law}

{loss, insurance, financial}

{interest, director, officer}

{tax, income, asset}

{competitive, industry, competition}

{financial, litigation, operation}

{stock, price, share}

{operation, international, foreign}

{operation, natural, condition}

{condition, economic, financial}

{provision, law, control}

{capital, credit, financial}

{personnel, key, retain}

{system, service, information}

{acquisition, growth, future}

{product, liability, claim}

We could be adversely affected by the loss of one or more principal employees or by an inability to attract and retain staff. Our ability to conduct our business may be adversely affected by Bermuda employment restrictions. We could face unanticipated losses from war, terrorism and political unrest, and these or other unanticipated losses could have a material adverse effect on our financial condition and results of operations. Our financial condition could be adversely affected by the occurrence of disasters. Emerging claim and coverage issues could adversely affect our business. If actual claims exceed our loss reserves, our financial results could be significantly adversely affected. The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or our results of operations. Our ability to pay dividends may be constrained by our holding company structure and the limitations on payment of dividends Bermuda law and regulations impose on us. We may encounter difficulties in maintaining the information technology systems necessary to run our business. Certain of our directors and officers may have conflicts of interest with us. We may be unable to purchase reinsurance protection to the extent we desire on acceptable terms; we are subject to the risk of non-payment by our reinsurers. Since we depend on a few reinsurance brokers for a large portion of our revenues, loss of business they provide could adversely affect us. Our reliance on reinsurance brokers subjects us to their credit risk. Our investment performance may affect our financial results and ability to conduct business. Our operating results may be adversely affected by currency fluctuations. We may require additional capital in the future. If our subsidiary is unable to obtain the necessary credit, we may not be able to offer reinsurance in certain markets. Risks Related to Our Industry Substantial new capital inflows into the reinsurance industry will increase competition. Events may result in political, regulatory and industry initiatives, which could adversely affect our business. Current legal and regulatory activities relating to insurance brokers and agents, contingent commissions and certain finite-risk insurance products could affect our business, results of operations and financial condition. Competition in the insurance industry could reduce our operating margins. The reinsurance business is historically cyclical and we expect to experience periods with excess underwriting capacity and unfavorable premiums. We may be adversely affected by interest rate changes. Risks Related to Our Common Shares Future sales of common shares may affect their market price. There are provisions in our charter documents which restrict the voting rights of our common shares. U.S. persons who own our common shares may have more difficulty in protecting their interests than U.S. persons who are shareholders of a U.S. corporation. You may have difficulty effecting service of process on us or enforcing judgments against us in the United States. We may require our shareholders to sell us their common shares. Montpelier Re Holdings Ltd. and Montpelier Reinsurance Ltd. may be subject to U.S. tax. U.S. persons who hold common shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of our related party insurance income ( RPII ). U.S. persons who hold common shares will be subject to adverse tax consequences if we are considered a passive foreign investment company for U.S. federal income tax purposes. We may become subject to adverse U.S. tax legislation concerning Bermuda companies. We may become subject to taxes in Bermuda after 2016, which may have a material adverse effect on our financial condition. The impact of Bermuda s commitment to the Organization for Economic Cooperation and Development to eliminate harmful tax practices is uncertain and could adversely affect our tax status in Bermuda. After December 31, 2010, qualified dividends on our common shares may no longer be taxed at the rate applicable for long-term capital gains unless Congress enacts legislation providing otherwise. If we become subject to insurance statutes and regulations in jurisdictions other than Bermuda or there is a change to Bermuda law or regulations or application of Bermuda law or regulations, there could be a significant and negative impact on our business.

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1165880--3/1/2007--MONTPELIER_RE_HOLDINGS_LTD