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Exhibit 10.23 February 25, 2005 C. Russell Fletcher III
c/o Montpelier Re Holdings Ltd.
Mintflower Place, 8 Par-La-Ville Road
Hamilton HM08, Bermuda Re:  Montpelier Re Holdings Ltd. Share Option Plan Dear Mr. Fletcher: As you are aware, Montpelier Re Holdings Ltd. (the Company) intends to declare a special
cash dividend (the Dividend) payable to our shareholders on March 31, 2005. In connection with
the Dividend, the Board of Directors has decided to permit holders of options to purchase common
shares of the Company (Common Shares) granted under the Montpelier Re Holdings Ltd. Share Option
Plan (the Plan), upon execution of this letter agreement, effective as of the above-written date,
to exercise vested and unvested options through a net share exercise of such options, on the terms
and conditions described below. In consideration of the promises contained herein and for other good and valuable
consideration, the sufficiency of which is acknowledged, the parties agree as follows: 1. Exercise of Options. You will exercise all outstanding options to purchase Common Shares
you hold on March 5, 2005. The exercise price with respect to such options shall be satisfied by
withholding a number of Common Shares which otherwise would have been delivered to you having a
fair market value on the date of exercise equal to the aggregate exercise price of the options.
For purposes of this Section 1, fair market value means the average of the average high and low
share price of a Common Share for the three trading days preceding and including the date of
exercise. 2. Restricted Shares. (a) Pursuant to Section 5 of the Plan, Common Shares you receive upon
the exercise of unvested options shall be subject to vesting restrictions applicable to such
options and the other restrictions on transfer set forth below. These shares in respect of options
outstanding (the Restricted Shares) shall be subject to the same vesting schedule and vesting
provisions as the original option to which the shares relate, as follows:




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Options (to be converted toExercise Price
    
    Restricted Shares)
    
    Vesting Date$19.17
    
    
    56,250
    
    
    September 30, 2005$20.00
    
    
    56,250
    
    
    September 30, 2006
 (b) Subject to your remaining employed with the Company on the applicable Vesting
Date or as otherwise provided in Section 4(c) of the Plan or in your award agreement with
respect to the original option, when a Vesting Date occurs the Company shall deliver to
you a certificate for the number of Common Shares as to which the Vesting Date occurs
without legend or restrictions. Until such time, Restricted Shares shall not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Any Restricted Shares that do not vest in
accordance with their terms will automatically be forfeited by you. (c) During the period that the Restricted Shares are outstanding, you shall have the
right to receive any dividends paid with respect to Common Shares in the same form and at
the same time as dividends are paid to shareholders of the Company. 3. Interpretation. The Board of Directors of the Company (the Board) or Compensation and
Nominating Committee of the Board (the Committee) shall have the exclusive authority to make all
decisions and/or interpretations with respect to the subject matter contained herein. 4. Withholding. The Company shall have the right to deduct any federal, state or local income
or other taxes required by law to be withheld with respect to the Restricted Shares, as it may deem
necessary or appropriate, in its sole discretion. 5. Governing Law.The terms of this letter agreement shall be governed by and construed in
accordance with the laws of Bermuda, without regard to conflict of laws principles. 2




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Sincerely,
MONTPELIER RE HOLDINGS LTD.By:
    Kernan V. ObertingName:
    Kernan V. ObertingTitle:
    Chief Financial Officer  ACCEPTED BY:  
 3