A.M. Best Affirms Ratings of Flagstone Reassurance Suisse SA, Its Affiliate and Flagstone Reinsurance Holdings Limited

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Flagstone Reassurance Suisse SA (Martigny, Switzerland) and its reassured affiliate, Flagstone Alliance Insurance and Reinsurance plc(Cyprus) as well as the ICR of “bbb-” of Flagstone Reinsurance Holdings Limited (Hamilton, Bermuda) [NYSE:FSR] (collectively referred to as Flagstone Re). Concurrently, A.M. Best has affirmed the indicative debt ratings of “bb” on preferred stock, “bb+” on subordinated debt and “bbb-” on senior debt for securities available under Flagstone Reinsurance Holdings Limited’s shelf registration. The outlook for all ratings is stable.

The ratings reflect Flagstone Re’s excellent level of risk-based capitalization, solid underwriting performance, experienced management team, its well developed business franchise and its diversified business profile. The ratings also are supported by the significant investments made in technical and human assets, which support the operating activities of the organization. Additionally, the ratings recognize the group’s conservative operating strategies and solid enterprise risk management framework, which has resulted in solid underwriting results.

Partially offsetting these positive rating attributes is the volatility of Flagstone Re’s operating performance resulting in a modified its investment strategy and underwriting appetite. The multiple acquisitions that the company has made since inception have been integrated and are expected to enhance the value of the overall organization.

The outlook reflects A.M. Best’s expectation that Flagstone Re’s overall performance will remain supportive of the required capitalization levels given its reduced risk appetite coupled with the underwriting environment in the property catastrophe exposure lines of business. Flagstone Re’s reduced risk appetite is evidenced by a lower return on equity target, modeling of investment risk using a more conservative technique and placing a cap on the percentage of allocation to equity investments. Total returns will be primarily driven by underwriting results as investment risk has been substantially reduced. Given the demands on underwriting performance, the outlook is reflective of Flagstone Re’s demonstrated underwriting acumen with loss and combined ratios, which compare favorably to its peers. A significant shift in operating or investment strategies may influence A.M. Best’s future expectations.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Natural Catastrophe Stress Test”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best CompanyGale Guerra, MBA, (908) 439-2200, ext. 5069
Senior Financial Analyst
gale.guerra@ambest.com
orRobert DeRose, (908) 439-2200, ext. 5453
Vice President
robert.derose@ambest.com
orRachelle Morrow, (908) 439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
orJim Peavy, (908) 439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Company