Fitch Removes Flagstone Re from Rating Watch; Affirms Ratings

Fitch's rating actions reflects its view that Flagstone is no longer actively pursuing the acquisition offer it made to IPC Holdings, Ltd. (IPC) on July 1. Today, IPC announced that its board of directors had approved a definitive amalgamation agreement with Validus Holdings, Ltd.

Fitch placed the ratings on Rating Watch Negative on July 6 due to concerns about how a combination of Flagstone and IPC's insured portfolios would affect the combined entities' risk-adjusted capitalization. At that time Fitch noted that IPC had received competing bids from other entities and that if IPC were to reject Flagstone's offer, Fitch would remove the ratings from Rating Watch.

Flagstone's current ratings reflect the company's strong underwriting capabilities, high-quality and liquid investment portfolio, and benefits derived from the company's diverse operating platform. Partially offsetting these positives are the effects on Flagstone's competitive position of the company's comparatively small capital base and short operating history. Additionally, Fitch believes that Flagstone is at a much earlier stage in its development than many of its peers, and that as a result, "key man risk" associated with the company's senior management team is comparatively high.

Fitch has removed the following ratings from Rating Watch Negative and affirmed the ratings with a Stable Rating Outlook:

Flagstone Reassurance Suisse SA:

--Insurer Financial Strength (IFS) at 'A-'.

Flagstone Reinsurance Holdings Limited

--Long-term Issuer Default Rating (IDR) at 'BBB+';

--$120 million of floating-rate subordinated debentures due Sept. 15, 2036 at 'BBB-';

--Euro13 million of floating-rate subordinated debentures due Sept. 15, 2036 at 'BBB-';

--$25 million of floating-rate subordinated debentures due Sept. 15, 2037 at 'BBB-'.

Flagstone Finance S.A.

--Long-term IDR at 'BBB+';

--$100 million of floating-rate subordinated debentures due July 30, 2037 at 'BBB-'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

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