PLATINUM UNDERWRITERS HOLDINGS, LTD.
The Belvedere Building
69 Pitts Bay Road
Pembroke, Bermuda HM 08

August 15, 2005

Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
Securities and Exchange Commission
Division of Corporation Finance

Mail Stop 6010
100 F Street, N.E.
Washington, D.C. 20549

Re: Form 10-K for the Year Ended December 31, 2004
File Number: 001-31341 (the "2004 10-K")

Dear Mr. Rosenberg:

The following information is provided by Platinum Underwriters
Holdings, Ltd. ("Platinum Holdings") in response to the comments issued by the
staff of the Division of Corporation Finance of the Securities and Exchange
Commission (the "Staff") by letter dated August 3, 2005 (the "Comment Letter")
as a result of the Staff's examination of the above-referenced document.

For ease of reference, the Staff's comments are included herein in
bold followed by our responses. In response to the Staff's request to provide
additional disclosure regarding certain aspects of our business, results of
operations and financial condition, we have furnished as exhibits hereto
relevant excerpts from our 2004 10-K to which we have added the requested
disclosure as highlighted.

We note that you have requested that we amend our 2004 10-K to
provide the additional disclosure requested. In that regard, please be advised
that we received a separate comment letter (the "Second Comment Letter") on a
Registration Statement on Form S-4 that we filed with the Securities and
Exchange Commission on July 26, 2005 (File Number 333-126883) (the "S-4"), a
copy of which is attached hereto for your convenience as Appendix I. We propose
that, rather than amend our 2004 10-K, we include the additional disclosure
requested in the Comment Letter in a pre-effective amendment to our S-4, along
with the additional disclosure requested in the Second Comment Letter. We would
also include such disclosure in our Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 2005, our Annual Report on Form 10-K for the Year
Ended December 31, 2005, and all of our subsequent filings pursuant to the
Securities Exchange Act of 1934, in each case as appropriate.

In order facilitate this coordinated approach, we are sending a copy
of this response to each of Jeffrey P. Riedler, Song Brandon and Suzanne Hayes,
the members of the Staff who reviewed the S-4. In addition, to facilitate your
review, we are sending to you, as well as to Dana Hartz and to Joseph Roesler,
five copies of this response by Federal Express today.

FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

BUSINESS

FINITE RISK, PAGE 10

1. WE NOTE FROM YOUR DISCLOSURE THAT YOU OFFER FINITE REINSURANCE AND BELIEVE
IT CAN BE EXPANDED UPON. PLEASE DISCLOSE FOR EACH MAIN CATEGORY OF FINITE
RISK CONTRACTS:

a. THE ECONOMIC BENEFIT THAT YOU ARE ATTEMPTING TO PROVIDE TO THE
CEDING COMPANIES.

b. WHETHER THE PROTECTION IS PROSPECTIVE OR RETROSPECTIVE.

c. ANY PROVISIONS IN THE CONTRACTS AND/OR TREATIES THAT ARE NOT USUALLY
INCLUDED IN A STANDARD REINSURANCE CONTRACT (I.E. CERTAIN RISK
MITIGATION FEATURES).

In response to the comments set forth in this paragraph 1, we have
included additional disclosure in the excerpt from our 2004 10-K set
forth in Exhibit A.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

CRITICAL ACCOUNTING POLICIES

PREMIUMS, PAGE 35

2. WE BELIEVE YOUR DISCLOSURE IN MANAGEMENT'S DISCUSSION AND ANALYSIS
REGARDING THE ESTIMATE OF ASSUMED PREMIUM ON YOUR REINSURANCE BUSINESS
COULD BE IMPROVED TO BETTER EXPLAIN THE JUDGMENTS AND UNCERTAINTIES
SURROUNDING THIS ESTIMATE AND THE POTENTIAL IMPACT ON YOUR FINANCIAL
STATEMENTS. ACCORDINGLY, PLEASE REVISE MD&A TO INCLUDE THE FOLLOWING
INFORMATION:

a. DISCUSS THE KEY ASSUMPTIONS USED TO ARRIVE AT MANAGEMENT'S BEST
ESTIMATE OF THE PREMIUMS WRITTEN BUT NOT REPORTED ESTIMATE AND THE
PREMIUMS EARNED BUT NOT REPORTED ESTIMATE, AND WHAT SPECIFIC FACTORS
LED MANAGEMENT TO BELIEVE EACH ASSUMED PREMIUM ESTIMATES ARE THE
MOST REALISTIC.

b. INCLUDE QUANTIFIED AND NARRATIVE DISCLOSURE FOR EACH OF YOUR PREMIUM
ESTIMATES OF THE IMPACT THAT REASONABLY LIKELY CHANGES IN ONE OR
MORE OF THE VARIABLES (I.E. METHODOLOGY AND/OR ASSUMPTIONS USED)
WOULD HAVE ON REPORTED RESULTS, FINANCIAL POSITION AND LIQUIDITY.

c. DISCLOSE THE PROVISION FOR DOUBTFUL ACCOUNTS THAT IS RECORDED
RELATED TO THE ASSUMED PREMIUM ESTIMATE.

In response to the comments set forth in this paragraph 2, we have
included additional disclosure in the excerpt from our 2004 10-K set
forth in Exhibit B.

UNPAID LOSSES AND LAE, PAGE 36

3. WE NOTE THAT YOU SET YOUR CLAIM RESERVES FOR ASSUMED REINSURANCE
OPERATIONS BASED UPON INFORMATION RECEIVED FROM THE CEDANT. AS THIS
APPEARS TO POSE A POTENTIAL FOR A HIGHER DEGREE OF UNCERTAINTY IN
ESTABLISHING THE ESTIMATE OF ASSUMED LOSS RESERVES AS COMPARED TO DIRECT
LOSS RESERVES, PLEASE EXPAND THE DISCLOSURE IN THE CRITICAL ACCOUNTING
ESTIMATES SECTION OF MD&A RELATED TO THIS UNCERTAINTY. ACCORDINGLY, PLEASE
REVISE MD&A TO INCLUDE THE FOLLOWING INFORMATION:

a. INCLUDE IN THIS DISCLOSURE THE RISKS ASSOCIATED WITH MAKING THIS
ESTIMATE AND THE EFFECTS AND EXPECTED EFFECTS THIS UNCERTAINTY HAS
OR WILL HAVE ON MANAGEMENT'S JUDGMENTS AND ASSUMPTIONS IN
ESTABLISHING THE ASSUMED LOSS RESERVE;

b. THE NATURE AND EXTENT OF THE INFORMATION RECEIVED FROM THE CEDANTS
RELATED TO POLICIES, CLAIMS, UNEARNED PREMIUMS AND LOSS RESERVES;

c. THE TIME LAG FROM WHEN CLAIMS ARE REPORTED TO THE CEDANT TO WHEN THE
CEDANT REPORTS THEM TO THE COMPANY AND WHETHER, HOW, AND TO WHAT
EXTENT THIS TIME LAG EFFECTS THE LOSS RESERVE
ESTIMATE;

d. HOW MANAGEMENT USES THE INFORMATION RECEIVED FROM THE CEDANTS IN ITS
DETERMINATION OF ITS ASSUMED LOSS RESERVES, WHETHER REINSURANCE
INTERMEDIARIES ARE USED TO TRANSACT AND SERVICE REINSURANCE
POLICIES, AND HOW THAT IMPACTS THE LOSS RESERVING METHODOLOGY;

e. THE AMOUNT OF ANY BACKLOG RELATED TO THE PROCESSING OF ASSUMED
REINSURANCE INFORMATION, WHETHER THE BACKLOG HAS BEEN RESERVED FOR
IN THE FINANCIAL STATEMENTS AND, IF APPLICABLE, WHEN
THE BACKLOG WILL BE RESOLVED;

f. WHAT PROCESS MANAGEMENT PERFORMS TO DETERMINE THE ACCURACY AND
COMPLETENESS OF THE INFORMATION RECEIVED FROM THE CEDANTS;

g. HOW MANAGEMENT RESOLVES DISPUTES WITH CEDANTS, HOW OFTEN DISPUTES
OCCUR, AND THE MAGNITUDE OF ANY CURRENT, MATERIAL DISPUTES; AND

h. WHETHER MANAGEMENT USES HISTORICAL LOSS INFORMATION TO VALIDATE ITS
EXISTING RESERVES AND/OR AS A MEANS OF NOTICING UNUSUAL TRENDS IN
THE INFORMATION RECEIVED FROM THE CEDANTS.

In response to the comments set forth in this paragraph 3, we have
included additional disclosure in the excerpt from our 2004 10-K set
forth in Exhibit B.

4. WE BELIEVE YOUR DISCLOSURE IN MANAGEMENT'S DISCUSSION AND ANALYSIS
REGARDING THE RESERVE FOR LOSS AND LOSS ADJUSTMENT EXPENSES COULD BE
IMPROVED TO BETTER EXPLAIN THE JUDGMENTS AND UNCERTAINTIES SURROUNDING
THIS ESTIMATE AND THE POTENTIAL IMPACT ON YOUR FINANCIAL STATEMENTS. WE
BELIEVE THAT DISCLOSURES EXPLAINING THE LIKELIHOOD THAT MATERIALLY
DIFFERENT AMOUNTS WOULD BE REPORTED UNDER DIFFERENT CONDITIONS OR USING
DIFFERENT ASSUMPTIONS IS CONSISTENT WITH THE OBJECTIVE OF MANAGEMENT'S
DISCUSSION AND ANALYSIS. ACCORDINGLY, PLEASE REVISE MD&A TO INCLUDE THE
FOLLOWING INFORMATION FOR EACH OF YOUR LINES OF BUSINESS:

a. PLEASE DISCLOSE THE RESERVES ACCRUED AS OF THE LATEST BALANCE SHEET
DATE PRESENTED. THE TOTAL OF THESE AMOUNTS SHOULD AGREE TO THE
AMOUNT PRESENTED ON THE BALANCE SHEET.

In response to the comment set forth in this paragraph 4.a, we have
included additional disclosure in the excerpt from our 2004 10-K set
forth in Exhibit B.

b. PLEASE DISCLOSE THE RANGE OF LOSS RESERVE ESTIMATES AS DETERMINED BY
YOUR ACTUARIES. INCLUDE THE KEY ASSUMPTIONS USED TO ARRIVE AT
MANAGEMENT'S BEST ESTIMATE OF LOSS RESERVES WITHIN THAT RANGE AND
WHAT SPECIFIC FACTORS LED MANAGEMENT TO BELIEVE THIS AMOUNT RATHER
THAN ANY OTHER AMOUNT WITHIN THE RANGE REPRESENTED THE BEST ESTIMATE
OF INCURRED LOSSES. INCLUDE QUANTIFIED AND NARRATIVE ANALYSES OF THE
IMPACT THAT REASONABLY LIKELY CHANGES IN ONE OR MORE OF THE
VARIABLES (I.E. ACTUARIALLY METHOD AND/OR ASSUMPTIONS USED) WOULD
HAVE ON REPORTED RESULTS, FINANCIAL POSITION AND LIQUIDITY.

We do not calculate a range around our loss reserves, but we do use
point estimates. Accordingly, we refer you to our response to
paragraph 4.c below.

c. IF YOU DO NOT CALCULATE A RANGE AROUND YOUR LOSS RESERVE, BUT
INSTEAD USE POINT ESTIMATES PLEASE INCLUDE THE FOLLOWING
DISCLOSURES:

- DISCLOSE THE VARIOUS METHODS CONSIDERED AND THE METHOD THAT
WAS SELECTED TO CALCULATE THE RESERVES. IF MULTIPLE POINT
ESTIMATES ARE GENERATED, INCLUDE THE RANGE OF THESE POINT
ESTIMATES. INCLUDE A DISCUSSION OF WHY THE METHOD SELECTED WAS
MORE APPROPRIATE OVER THE OTHER METHODS.

- DISCUSS HOW MANAGEMENT DETERMINED THE MOST APPROPRIATE POINT
ESTIMATE AND WHY THE OTHER POINT ESTIMATES WERE NOT CHOSEN.
ALSO CLARIFY WHETHER THE COMPANY ACTUALLY RECORDS TO THE POINT
ESTIMATE OR IF NOT, HOW THAT ESTIMATE IS USED.

- INCLUDE QUANTIFIED AND NARRATIVE DISCLOSURE OF THE IMPACT THAT
REASONABLY LIKELY CHANGES IN ONE OR MORE OF THE VARIABLES
(I.E. ACTUARIALLY METHOD AND/OR ASSUMPTIONS USED) WOULD HAVE
ON REPORTED RESULTS, FINANCIAL POSITION AND LIQUIDITY.

In response to the comment set forth in this paragraph 4.c, we have
included additional disclosure in the excerpt from our 2004 10-K set
forth in Exhibit B.

d. BECAUSE IBNR RESERVE ESTIMATES ARE MORE IMPRECISE, PLEASE DISCLOSE
THE AMOUNT OF IBNR SEPARATELY FROM CASE RESERVES FOR EACH LINE OF
BUSINESS.

In response to the comment set forth in this paragraph 4.d, we have
included additional disclosure in the excerpt from our 2004 10-K set
forth in Exhibit B.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNPAID LOSSES AND LAE, PAGES F-17

5. WE NOTE FROM YOUR DISCLOSURE THAT FAVORABLE DEVELOPMENT OCCURRED DUE TO
CHANGES IN 2004 OF ESTIMATES OF PREMIUMS AND THE PATTERNS OF THEIR
EARNINGS ACROSS CURRENT AND PRIOR ACCIDENT YEARS. PLEASE CLARIFY IN YOUR
FILING HOW CHANGES IN PREMIUMS ESTIMATES IMPACTED THE DEVELOPMENT OF YOUR
LOSS RESERVES.

When previous estimates of earned premium are increased or
decreased, the related provisions for losses and LAE previously
recorded are also increased or decreased. This disclosure has been
added to "Critical Accounting Policies -- Premiums" in Exhibit B.

* * * *

If you have any questions regarding these responses or any further comments,
please contact the undersigned at (441) 295-7195.

Very truly yours,

/s/ Joseph F. Fisher

Joseph F. Fisher
Executive Vice President
and Chief Financial Officer

Enclosures
Copy (w/encl) to Dana Hartz
Joseph Roesler
Jeffrey P. Riedler
Song Brandon
Suzanne Hayes

APPENDIX I

UNITED STATES
(SEC LOGO) SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE

MAIL STOP 6010

August 10, 2005

Mr. Joseph F. Fisher
Executive Vice President And Chief Financial Officer
Platinum Underwriters Holdings, Ltd.
The Belvedere Building
69 Pitts Bay Road
Pembroke, Bermuda Hm 08

RE: PLATINUM UNDERWRITERS FINANCE INC.
PLATINUM UNDERWRITERS HOLDINGS, LTD.
REGISTRATION STATEMENT ON FORM S-4
FILE NUMBER 333-126883

Dear Mr. Fisher:

This is to advise you that we have limited our review of the above
referenced registration statement to only the issues identified below. Where
indicated, we think you should revise your document in response to these
comments. If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be as detailed as
necessary in your explanation.

Please understand that the purpose of our review process is to assist you
in your compliance with the applicable disclosure requirements and to enhance
the overall disclosure in your filing. We look forward to working with you in
these respects. We welcome any questions you may have about our comments or on
any other aspect of our review. Feel free to call us at the telephone numbers
listed at the end of this letter.

Form 10-K for the fiscal year ended December 31, 2004

1. We will be monitoring the accounting disclosure in the Form 10-K for
the period ended December 31, 2004 for Platinum Underwriters
Holdings, Ltd. You will be receiving our accounting comments under
separate cover. All comments will need to be fully resolved before
we take final action on the registration statement.

Form S-4

2. We refer you to your registration statement on Form S-1
(No.333-86906) that went effective on October 28, 2002. In that S-1,
it appears you were offering unit securities

which included an ownership interest in a senior note of Platinum
Underwriters Finance, Inc. It is unclear to us why Platinum
Underwriters Finance has not been filing periodic reports since the
effectiveness of that Form S-1. Please provide us with an analysis
as to how you determined Platinum Underwriters Finance was not
required to file any periodic reports following the effectiveness of
the Form S-1 referenced above.

General

3. We note that you are registering the exchange notes in reliance on
Staff's position set forth in Exxon Capital Holdings Corporation
(May 13, l988), Morgan Stanley & Co. Incorporated (June 5, 1991),
and Shearman & Sterling (July 2, 1993). Accordingly, with your next
filing, please provide us with a supplemental letter stating you are
registering the exchange offer in reliance on Staff's position
contained in these no-action letters. Also include in the
supplemental letter the representations contained in the Morgan
Stanley and Shearman & Sterling no-action letters.

Financial Statements

4. It appears your registration statement is lacking some of the
information required by Rule 3l0(c)(4) of Regulation S-X. Please
provide us with analysis as to how you have complied with Rule
310(c)(4) of Regulation S-X for this registration statement.

Signature Page

5. Your principal financial officer and either a controller or chief
accounting officer must sign the registration statement. Your next
amendment and all subsequent amendments must contain this signature.
If a person acts in more than one of these capacities, the signature
page must indicate all of the capacities in which they are signing.
Please revise your signature page accordingly.

We urge all persons who are responsible for the accuracy and adequacy of
the disclosure in the filings reviewed by the staff to be certain that they have
provided all information investors require for an informed decision. Since the
company and its management are in possession of all facts relating to a
company's disclosure, they are responsible for the accuracy and adequacy of the
disclosures they have made.

Notwithstanding our comments, in the event the company requests
acceleration of the effective date of the pending registration statement, it
should furnish a letter, at the time of such request, acknowledging that:

- should the Commission or the Staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;

- the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and accuracy of the disclosure in the filing; and

- the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

In addition, please be advised that the Division of Enforcement has access
to all information you provide to the staff of the Division of Corporation
Finance in connection with our review of your filing or in response to our
comments on your filing.

We will consider a written request for acceleration of the effective date
of the registration statement as a confirmation of the fact that those
requesting acceleration are aware of their respective responsibilities under the
Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to
the proposed public offering of the securities specified in the above
registration statement. We will act on the request and, pursuant to delegated
authority, grant acceleration of the effective date.

Please contact Song Brandon at (202) 551-3621, Suzanne Hayes, Legal Branch
Chief at (202) 551-3675 or me at (202) 551-3710 with any questions.

Sincerely,

/s/ Suzanne Hayes
for Jeffrey P. Riedler
Assistant Director

cc: Linda E. Ransom, Esq.
Jonathan L. Freedman, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019

EXHIBIT A

FINITE RISK

The Finite Risk operating segment includes principally structured
reinsurance contracts with ceding companies whose needs may not be met
efficiently through traditional reinsurance products. The classes of risks
underwritten through finite risk contracts are generally consistent with the
classes covered by traditional products. Typically, the amount of losses we
might pay is finite or capped. In return for this limit on losses, we often
accept a cap on our potential profit margin specified in the treaty and return
profits above this margin to the ceding company, and thus this type of coverage
typically is less expensive for ceding companies. The finite risk contracts that
we underwrite generally provide prospective protection, meaning coverage is
provided for losses that are incurred after inception of the contract, as
contrasted with retrospective coverage which covers losses that are incurred
prior to inception of the contract. The three main categories of finite risk
contracts that we underwrite are described below:

- Finite quota share. Under finite quota share reinsurance contracts, the
reinsurer agrees to indemnify a ceding company for a percentage of its
losses up to an aggregate maximum or cap in return for a percentage of the
ceding company's premium, less a ceding commission. The expected benefit
to the ceding company provided by finite quota share reinsurance is a
sharing of losses with the reinsurer and increased underwriting capacity
of the ceding company. These contracts often provide broad protection and
may cover multiple classes of a ceding company's business. Unlike a
typical traditional quota share reinsurance agreement, these contracts
often provide for profit commissions which take into account investment
income for purposes of calculating the reinsurer's profit on business
ceded. Unlike traditional quota share reinsurance agreements, finite quota
share contracts are often written on a funds withheld basis, meaning the
parties agree that funds that would normally be remitted to a reinsurer
are withheld by the ceding company.

- Multi-year excess-of-loss. These reinsurance contracts often complement
ceding companies' traditional excess-of-loss reinsurance programs. This
type of contract often carries an up-front premium plus additional
premiums which are dependent on the magnitude of losses claimed by the
ceding company under the contract. The expected benefit to the ceding
company on multi-year excess-of-loss reinsurance is that the ceding
company has the ability to negotiate specific terms and conditions that
remain applicable over multiple years of coverage. These contracts may
cover multiple classes of a ceding company's business and typically
provide the benefit of reducing the impact of large losses on a ceding
company's underwriting results. In general, these contracts are designed
so that the ceding company funds the expected level of loss activity over
the multi-year period. The reinsurer incorporates a profit margin to cover
its costs and the risk that losses are worse than expected. The payment of
premiums based on the magnitude of losses claimed is intended to benefit
the ceding company by linking its own loss experience to the actual cost
of reinsurance over time. The multiple year term and premium structure of
multi-year excess-of-loss reinsurance contracts are not typically found in
traditional reinsurance contracts.

- Whole account aggregate stop loss. Aggregate stop loss reinsurance
contracts provide broad protection against a wide range of contingencies
that are difficult to address with traditional reinsurance, including
inadequate pricing by a ceding company or higher frequency of claims than
the ceding company expected. The reinsurer on a whole account aggregate
stop loss contract agrees to indemnify a ceding company for aggregate

losses in excess of a deductible specified in the contract. These
contracts can be offered on a single or multi-year basis, and may provide
catastrophic and attritional loss protection. The benefit of whole account
aggregate stop loss contracts to ceding companies is that such contracts
provide the broadest possible protection of a ceding company's
underwriting results which is not generally available in the traditional
reinsurance market. Unlike traditional reinsurance contracts, these
contracts often contain sub-limits of coverage for losses on certain
classes of business or exposures. These contracts are often written on a
funds withheld basis. In addition, these contracts often include
provisions for profit commissions which take into account investment
income for purposes of calculating the reinsurer's profit on business
ceded.

EXHIBIT B

CRITICAL ACCOUNTING POLICIES

It is important to understand the Company's accounting policies in order
to understand its financial position and results of operations. Management
considers certain of these policies to be critical to the presentation of the
financial results since they require management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets, liabilities, revenues, expenses, and related disclosures at the
financial reporting date and throughout the relevant periods. Certain of the
estimates and assumptions result from judgments that can be subjective and
complex, and consequently actual results may differ from these estimates. The
Company's most critical accounting policies involve written and unearned
premium, unpaid losses and LAE, reinsurance, investments, income taxes and
stock-based compensation.

PREMIUMS

Assumed reinsurance premiums are recognized as revenues when premiums
become earned proportionately over the coverage period. Net premiums earned are
recorded in the statement of income, net of the cost of retrocession. Net
premiums written not yet recognized as revenue are recorded on the balance sheet
as unearned premiums, gross of any ceded unearned premiums.

Due to the nature of reinsurance, ceding companies routinely report and
remit premiums subsequent to the contract coverage period. Consequently,
reinsurance premiums written include amounts reported by the ceding companies,
supplemented by estimates of premiums that are written but not reported
("WBNR"). In addition to estimating WBNR, the Company estimates the portion of
premiums earned but not reported ("EBNR"). The Company also estimates the
expenses associated with these premiums in the form of losses, LAE and
commissions. When estimating premiums written and earned, each of our
reinsurance subsidiaries segregates business into classes by type of coverage
and type of contract (approximately 80 classes). Within each class, business is
further segregated by the year in which the contract incepted ("underwriting
year"), starting with 2002. Estimates of WBNR and EBNR are made for each class
and underwriting year. We estimate premiums based on ceding company estimates
and our own judgment after considering factors such as the ceding company's
historical premium versus projected premium, the ceding company's history of
providing accurate estimates, anticipated changes in the marketplace and the
ceding company's competitive position therein, reported premiums to date and the
anticipated impact of proposed underwriting changes. We evaluate the
appropriateness of the premium estimates in light of the actual premiums
reported by the ceding companies and any adjustments to these estimates are
accounted for as changes in estimates and are reflected in results of operations
in the period in which they are made. Adjustments to original premium estimates
could be material due to the diversity of reporting practices of ceding
companies and the inherent difficulty in estimating premium inflows, among other
factors, and could significantly impact earnings in the period they are
recorded. Due to the time lag inherent in the reporting of premiums by ceding
companies, a significant portion of amounts included as premiums written and
premiums earned represents estimated premiums and are not currently due based on
the terms of the underlying contracts. When previous estimates of premiums
earned are increased or decreased, the related provisions for losses and LAE and
acquisition costs previously recorded are also increased or decreased.

Certain of our reinsurance contracts include provisions that adjust
premiums or acquisition expenses based upon the loss experience under the
contracts. Reinstatement premiums and additional premiums are recognized in
accordance with the provisions of assumed reinsurance contracts, based on loss
experience under such contracts. Reinstatement premiums are the premiums charged
for the restoration of the reinsurance limit of a reinsurance contract to its
full amount, generally coinciding with the payment by the reinsurer of losses.
These premiums relate to the future coverage obtained for the remainder of the
initial policy term and are earned over the remaining policy term. Additional
premiums are those premiums triggered by losses and not related to reinstatement
of limits and are earned immediately. An allowance for uncollectible premiums is
established for possible non-payment of such amounts due, as deemed necessary.
At year-end 2004 no such allowance was made, based on our historical experience,
the general profile of our ceding companies and our ability in most cases to
contractually offset these premium receivables with losses and loss adjustment
expenses or other amounts payable to the same parties.

UNPAID LOSSES AND LAE

The most significant judgment made by management in the preparation of
financial statements is the estimation of unpaid losses and LAE, also referred
to as "loss reserves." These liabilities are balance sheet estimates of future
amounts required to pay losses and LAE for reinsured claims which have occurred
at or before the balance sheet date. Every quarter, the Company's actuaries
prepare estimates of the loss reserves based on established actuarial
techniques. Because the ultimate amount of unpaid losses and LAE is uncertain,
we believe that quantitative techniques to estimate these amounts are enhanced
by professional and managerial judgment. Company management reviews these
estimates and determines its best estimate of the liabilities to record in the
Company's financial statements.

Unpaid losses and LAE include estimates of the cost of claims that were
reported but not yet paid ("case reserves") and the cost of claims that were
incurred but not reported ("IBNR"). Case reserves are usually based upon claim
reports received from ceding companies. The information we receive varies by
ceding company and may include paid losses, estimated case reserves, and an
estimated provision for IBNR reserves. Case reserves may be increased or reduced
by the Company's claims personnel based on receipt of additional information,
including information received from ceding companies. IBNR is based on actuarial
methods including the loss ratio method, the Bornhuetter-Ferguson method and the
chain ladder method. IBNR related to a specific event may be based on the
Company's estimated exposure to an industry loss and may include the use of
catastrophe modeling software.

When estimating unpaid losses and LAE, each of our reinsurance
subsidiaries segregates business into classes by type of coverage and type of
contract (approximately 80 classes). Within each class the business is further
segregated by the year in which the contract incepted ("underwriting year"),
starting with 2002.

The gross liabilities recorded on our balance sheet as of December
31, 2004 for unpaid losses and LAE were $1,380,955,000. The following table sets
forth a breakdown between case reserves and IBNR by segment at December 31, 2004
($ in thousands):

Property Finite
and Marine Casualty Risk Total
---------- ---------- ---------- ----------

Case reserves $ 9,221 87,993 132,240 $ 229,454
IBNR 223,740 647,926 279,835 1,151,501
---------- ---------- ---------- ----------
Total unpaid losses and LAE $ 232,961 735,919 412,075 $1,380,955
========== ========== ========== ==========

Generally, initial actuarial estimates of IBNR not related to a specific
event are based on the loss ratio method applied to each underwriting year for
each class of business. Actual paid losses and case reserves ("reported losses")
are subtracted from expected ultimate losses to determine IBNR. The initial
expected ultimate losses involve management judgment and are based on: (i)
contract by contract expected loss ratios derived from the Company's pricing
process, and (ii) historical loss ratios of the Company and St. Paul Re adjusted
for rate changes and trends. These judgments will take into account management's
view of past, current and future: (i) market conditions, (ii) changes in the
business underwritten, (iii) changes in timing of the emergence of claims and
(iv) other factors that may influence expected ultimate losses.

Over time, as a greater number of claims are reported, actuarial estimates
of IBNR are based on the Bornhuetter-Ferguson and the chain ladder techniques.
The Bornhuetter-Ferguson technique utilizes actual reported losses and expected
patterns of reported losses, taking the initial expected ultimate losses into
account to determine an estimate of expected ultimate losses. This technique is
most appropriate when there are few reported claims and a relatively less stable
pattern of reported losses. The chain ladder technique utilizes actual reported
losses and expected patterns of reported losses to determine an estimate of
expected ultimate losses that is independent of the initial expected ultimate
losses. This technique is most appropriate when there are a large number of
reported losses with significant statistical credibility and a relatively stable
pattern of reported losses. Multiple point estimates using a variety of
actuarial techniques are calculated for many, but not all, of our 80 classes of
coverage for each underwriting year. We do not believe that these multiple point
estimates are or should be considered a range. Our actuaries look at each class
and determine the most appropriate point estimate based on the characteristics
of the particular class and other relevant factors such as historical ultimate
loss ratios, the presence of individual large losses, and known occurrences that
have not yet resulted in reported losses. For some classes of business our
actuaries believe that a review of individual contract information improves the
loss reserve estimate. For example, individual contract review is particularly
important for the Finite Risk segment and the Accident and Health class within
the Casualty segment. Once the actuaries make their determinations of the most
appropriate point estimate for each class, this information is aggregated and
presented to executive management for review and approval. At December 31, 2004
the liability for unpaid losses and LAE that we recorded reflected the point
estimates of IBNR prepared by our actuaries.

Generally, North American casualty excess business has the longest pattern
of reported losses and therefore the greatest uncertainty. IBNR for these
classes at December 31, 2004 was $447 million which was 39% of the total IBNR
for the Company at that date. As an example, an increase in the initial expected
loss ratio of 5 percentage points would increase the IBNR for these classes by
$24 million which is approximately 5%. As another example, if the estimated
pattern of reported losses was accelerated by 5% the IBNR for these classes
would decrease by $2 million which is less than 1%.

The pattern of reported losses is determined utilizing actuarial analysis,
including management's judgment, and is based on historical patterns of the
recording of paid losses and case reserves to the Company, as well as industry
patterns. Information that may cause historical patterns to differ from future
patterns is considered and reflected in expected patterns as appropriate. For
property and health coverages these patterns indicate that a substantial portion
of the ultimate losses are reported within 2 to 3 years after the contract is
effective. Casualty patterns can vary from 3 years to over 20 years depending on
the type of business.

While the Company commenced operations in 2002, the business written is
sufficiently similar to the historical business of St. Paul Re that the Company
uses the historical loss experience of this business to estimate its initial
expected ultimate losses and its expected patterns of reported losses. These
patterns can span more than a decade and, given its own limited history, the
availability of the St. Paul Re data is a valuable asset to the Company.

We do not establish liabilities until the occurrence of an event that may
give rise to a loss. When an event of sufficient magnitude occurs, we may
establish a specific IBNR reserve. Generally, this involves a catastrophe
occurrence that affects many ceding companies. Ultimate losses and LAE are based
on management's judgment that reflects estimates gathered from ceding companies,
estimates of insurance industry losses gathered from public sources and
estimates from catastrophe modeling software.

Estimated amounts recoverable from retrocessionaires on unpaid losses and
LAE are determined based on the Company's estimate of ultimate losses and LAE
and the terms and conditions of its retrocessional contracts. These amounts are
reflected as assets.

Unpaid losses and LAE represent management's best estimates, at a given
point in time, of the ultimate settlement and administration costs of claims
incurred, and it is possible that the ultimate liability may materially differ
from such estimates. Such estimates are not precise because, among other things,
they are based on predictions of future developments and estimates of future
trends in claim severity and frequency and other factors. Because of the degree
of reliance that we necessarily place on ceding companies for claims reporting,
the associated time lag, the low frequency/high severity nature of some of the
business that we underwrite and the varying reserving practices among ceding
companies, our reserve estimates are highly dependent on management judgment and
are therefore uncertain.

In property classes, there can be additional uncertainty in loss
estimation related to large catastrophe events. With wind events, such as
hurricanes, the damage assessment process may take more than a year. The cost of
rebuilding is subject to increase due to supply shortages for construction
materials and labor. In the case of earthquakes, the damage assessment process
may take several years as buildings are discovered to have structural weaknesses
not initially detected. The uncertainty inherent in loss estimation is
particularly pronounced for casualty coverages, such as umbrella liability,
general and product liability, professional liability, directors and officers
liability and automobile liability, where information, such as required medical
treatment and costs for bodily injury claims, only emerges over time. In the
overall loss reserving process, provisions for economic inflation and changes in
the social and legal environment are considered

Loss reserve calculations for direct insurance business are not precise in
that they deal with the inherent uncertainty of future developments. Primary
insurers must estimate their own losses, often based on incomplete and changing
information. Reserving for reinsurance business introduces further uncertainties
compared with reserving for direct insurance business. The uncertainty in the
reserving process for reinsurers is due, in part, to the time lags inherent in

reporting from the original claimant to the primary insurer to the reinsurer. As
predominantly a broker market reinsurer for both excess-of-loss and proportional
contracts, we are subject to a potential additional time lag in the receipt of
information as the primary insurer reports to the broker who in turn reports to
us.

Since we rely on information regarding paid losses, case reserves, and
IBNR reserves provided by ceding companies in order to assist us in estimating
our own liability for unpaid losses and LAE, we maintain certain procedures in
order to help determine the completeness and accuracy of such information.
Periodically, management assesses the reporting activities of these companies on
the basis of qualitative and quantitative criteria. In addition to managing
reported claims and conferring with ceding companies on claims matters, our
claims personnel conduct periodic audits of specific claims and the overall
claims procedures of our ceding companies at their offices. We rely on our
ability to effectively monitor the claims handling and claims reserving
practices of ceding companies in order to establish the proper reinsurance
premium for reinsurance agreements and to establish proper loss reserves.
Disputes with ceding companies have been rare and generally have been resolved
through negotiation.

Estimates of unpaid losses and LAE are periodically re-estimated and
adjusted as new information becomes available. Any such adjustments are
accounted for as changes in estimates and are reflected in results of operations
in the period in which they are made.

As of December 31, 2004, we did not have any significant back-log related
to our processing of assumed reinsurance information.