Bermuda-based reinsurer Montpelier Re Holdings Ltd. stands to be paid about $2.5 million in interest payments after winning an arbitration decision.

The company's principal operating subsidiary Montpelier Reinsurance Ltd. said the dispute was with Manufacturers Property & Casualty Ltd. (MPCL).

The matter involved a dispute concerning two contracts pursuant to which Montpelier Re purchased reinsurance protection from MPCL in 2005.

The award dismisses MPCL's claim for rescission of the disputed contracts and calls for MPCL to pay Montpelier Re the outstanding losses on the contracts plus accrued interest through the date payment is made.

The amount of accrued interest due Montpelier Re, calculated through yesterday, was approximately $2.5 million, the company said.

Montpelier added that it did not anticipate any increase in its net loss estimates associated with two first-quarter catastrophes - the Chilean earthquake and windstorm Xynthia - over those previously announced.

It also reaffirmed its previously announced pre-tax net loss estimate of $20 million from the Deepwater Horizon rig loss.