Montpelier Announces Capitalization of Blue Ocean Re Holdings Ltd.

Blue Ocean will provide fully collateralized retrocessionalprotection to parties other than Montpelier and has no current plansto obtain a rating from any rating agency. Initially, Blue Oceananticipates underwriting gross aggregate policy limits in excess of$350 million.

Montpelier Agency Ltd., a subsidiary of Montpelier, will performunderwriting services for Blue Ocean, enabling Montpelier to leverageits skill set on a capital base distinct from Montpelier ReinsuranceLtd. John Bassett, a director of Montpelier Agency Ltd. and previouslyresponsible for Montpelier's retrocessional business, will oversee theunderwriting.

Anthony Taylor, Chairman, President and Chief Executive ofMontpelier, commented: "We are extremely pleased to have completedthis significant step in our announced plans to pursue non-traditionalapproaches to the management of our business. The separatecapitalization of Blue Ocean will allow us to take advantage offavorable underwriting opportunities efficiently in what has becomeone of the most capital-intensive classes of reinsurance."

Montpelier Re Holdings Ltd., through its operating subsidiaryMontpelier Reinsurance Ltd., is a premier provider of global propertyand casualty reinsurance and insurance products. During the 9 monthsended September 30, 2005, Montpelier underwrote $872 million in grosspremiums written. Shareholders' equity at September 30, 2005 was $1.1billion. Additional information can be found in Montpelier's publicfilings with the Securities and Exchange Commission.

Application of the Safe Harbor of the Private SecuritiesLitigation Reform Act of 1995:

This press release contains, and Montpelier may from time to timemake, written or oral "forward-looking statements" within the meaningof the U.S. federal securities laws, which are made pursuant to thesafe harbor provisions of the Private Securities Litigation Reform Actof 1995. All forward-looking statements rely on a number ofassumptions concerning future events and are subject to a number ofuncertainties and other factors, many of which are outsideMontpelier's control that could cause actual results to differmaterially from such statements. In particular, statements using wordssuch as "may," "should," "estimate," "expect," "anticipate," "intend,""believe," "predict," "potential," or words of similar importgenerally involve forward-looking statements.

Important events and uncertainties that could cause the actualresults, future dividends or future repurchases to differ include, butare not necessarily limited to: market conditions affectingMontpelier's common share price; our short operating and tradinghistory; our dependence on principal employees; the cyclical nature ofthe reinsurance business; the levels of new and renewal businessachieved; opportunities to increase writings in our core property andspecialty reinsurance and insurance lines of business and in specificareas of the casualty reinsurance market; the estimates reported bysyndicates under existing qualifying quota share contracts; theinherent uncertainties of establishing reserves for loss and lossadjustment expenses, particularly on longer-tail classes of businesssuch as casualty; unanticipated adjustments to premium estimates; thepossibility of severe or unanticipated losses from natural or man-madecatastrophes, including Hurricanes Katrina, Rita and Wilma; evolvinginterpretive issues with respect to coverage as a result of HurricanesKatrina, Rita and Wilma; the effectiveness of our loss limitationmethods; changes in the availability, cost or quality of reinsuranceor retrocessional coverage; changes in general economic conditions;changes in governmental regulation or tax laws in the jurisdictionswhere we conduct business; the total industry losses resulting fromHurricanes Katrina, Rita and Wilma, the actual number of our insuredsincurring losses from these storms, the limited actual loss reportsreceived from our insureds to date, our reliance on industry lossestimates and those generated by modeling techniques, the impact ofthese storms on our reinsurers, the amount and timing of reinsurancerecoverables and reimbursements actually received by us from ourreinsurers and the overall level of competition, and the relateddemand and supply dynamics, in the reinsurance and retrocessionmarkets as contracts come up for renewal; market acceptance of BlueOcean's underwriting capacity without a financial strength rating froman independent rating agency; the impact of terrorist activities onthe economy; competition resulting from: growing capital levels in thereinsurance industry, in some cases, declining demand due to, amongother things, increased retentions by cedants, and other factors; andrating agency policies and practices. Montpelier's forward-lookingstatements concerning market fundamentals could be affected by changesin demand, pricing and policy term trends and competition. These andother events that could cause actual results to differ are discussedin detail in "Risk Factors" under Item 8.01 of Montpelier's CurrentReport on Form 8-K filed on September 27, 2005 with the Securities andExchange Commission.

Montpelier undertakes no obligation to publicly update or reviseany forward-looking statements, whether as a result of newinformation, future events or otherwise. Readers are cautioned not toplace undue reliance on these forward-looking statements, which speakonly as of the date on which they are made.