Nothing piques my investment interest more than when a historically effective company is surrounded by unusual circumstances. That doesn't automatically make it a great opportunity, but let's just say it's a nice place to start -- especially in the case of Montpelier Re (NYSE:MRH).

Last Wednesday, the Motley Fool Stock Advisor and Motley Fool Hidden Gems pick reported earnings of $83.3 million, or $0.86 per share, for a period with nearly no major catastrophes. Only a year ago, the Bermuda-based provider of property and casualty reinsurance posted a horrific $875.1 million loss related to 2005's barrage of infamous hurricanes. Yet despite its solid recent results, which suggest that Montpelier is on a sensible road to recovery, shares are down around 7% since the company released earnings.

Wall Street's big concern is that net premiums written for the quarter were less than half of what they were in the same period last year. Analysts expected slight growth in net premiums, or at the very least, a smaller drop than the near-55% decline that actually occurred. However, our Motley Fool CAPS community continues to be bullish on Montpellier, giving the company a four-star rating. I tend to agree with my Foolish friends that the reduction in premiums is little cause for concern.

Why? CEO Anthony Taylor and his management team are making a concerted effort to lower Montpelier's maximum catastrophe exposure. They're writing more prudent -- and therefore, more profitable -- policies, as evidenced by dramatically improving combined ratio figures. Montpelier's combined ratio fell from 422.6% in Q3 2005 to a remarkable 58.3% for the current quarter. In other words, the company is more willing than ever to trade top-line growth for a better chance to withstand another string of freak events like those in 2005. Of course, whether or not this is a good move depends on your own time-horizon and appetite for risk.

I don't expect extraordinary growth in Montpelier Re's book value or significant multiple expansion to spark any outsized returns over the short run. In fact, with Montpelier trading at about 1.3 times book value, the stock -- although reasonably priced -- is by no means a screaming bargain. However, if you're a long-term investor who doesn't necessarily mind sacrificing a few percentage points of return for a chance to own a reinsurer that might actually be around in the next couple of decades, then Montpelier is worth a prudent gander.

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Montpelier Re is both a Motley Fool Stock Advisor and Motley Fool Hidden Gems selection. Click their respective links to try either newsletter -- David and Tom Gardner's flagship market-beating service, and Tom and Bill Mann's search for solid small-cap superstars -- free for 30 days.

Contributing stock analyst Brian Pacampara does not own shares of Montpelier Re. The Fool's disclosure policy is no disaster.