Flagstone Re Q1 Net Down Slightly at $32.86 Million

Bermuda-based Flagstone Reinsurance Holdings Limited managed to hold its net income for the first quarter of 2008 at almost the same level as last year, posting $32.86 million, compared to $35.6 million in Q1 2007.

2008 basic book value per share was $14.53 and diluted book value per share of $14.08, up 2.8 percent and 1.8 percent for the quarter (inclusive of dividends), respectively.

Other operating highlights for the first quarter included the following:
— Operating income (which excludes Capital gains/losses) increased by 84.9 percent to $57.5 million;
— Gross premiums written increased by 17.0 percent to $242.2 million;
— Net premiums earned increased by 33.6 percent to $135.3 million;
— Combined ratio improved to 66.9 percent from 74.3 percent;
— Investment returns of 0.32 percent.

Chairman Mark Byrne noted: “Organizationally, we had a productive start to the year, with the announcements of: (1) on March 6, 2008, our intention to subscribe for a controlling stake in Imperial Re in South Africa; and (2) on April 28, 2008, the intended acquisition of a minority stake in Alliance Re from current shareholders. Both these strategic initiatives dovetail with our strategy of adding further diversification to our global portfolio and gaining local access and talent in growing and attractive markets.”

Despite his Company’s relative success in maintaining its earnings, Byrne noted: “The first quarter of 2008 was not pleasing from an investment returns perspective and was one of the most difficult investing periods in recent memory. Flagstone’s investment portfolio performance, while modest for the quarter, continued to show relatively low volatility with the total return for the quarter being 0.32 percent with the positive results on the cash and treasuries portfolio being offset by the poor performance of the global equity markets.

“Our equity portfolio rebounded in April regaining approximately 50 percent of the losses suffered in the first quarter of 2008. We continue to believe that our investment strategy to create a portfolio of diversified investment risks adds balance to a reinsurer’s risk portfolio, resulting in higher and more stable returns over time, and enhanced financial strength.”

The full report, as well as a replay of the earnings conference call is available on the Company’s web site at: www.flagstonere.bm.

Source: Flagstone Re