"Flagstone's third quarter results continue our excellent performance in 2009," said David Brown, Flagstone Chief Executive Officer.  "Our core underwriting results were again strong this quarter, and we continue to develop a geographically diversified business as well as further expand our specialty lines, and our Lloyds business.  In the quarter, our global platform generated a loss ratio of 41.0%, creating an underwriting profit of $48.5 million.  This result is especially noteworthy considering the continued growth of our non-catastrophe business, which now accounts for 49% of our portfolio.  A low loss ratio, when combined with our ability to achieve a high premium to surplus ratio means our shareholders will benefit from quality book value growth over time."

Mr. Brown continued, "We believe we are focused on the best rated lines of business in our industry and continuously optimize our portfolio by allocating capacity across lines, clients, programs and layers as opportunities arise.  Some rates have softened slightly from historically high levels but continue to significantly exceed our internal return targets."

"We were pleased with our book value growth this quarter and we continue to generate excellent underwriting performance with a conservatively positioned asset portfolio," said Mark Byrne, Flagstone Chairman. "Since Flagstone's inception, we have generated 20% rates of top-line growth and industry-leading loss ratios. The Company continues to maintain strong capital adequacy and, while we have maintained a strong balance sheet, we have the ability to deploy our growing capital base to attractive opportunities without incremental expense. Many cedants are trying to diversify their reinsurance purchases away from large shares with the largest reinsurers; this has caused some shifting in programs that have been with the same panel of reinsurers for many years. Obviously, this kind of change benefits the high quality, younger companies, and in 2009 we have gained new business from some of the industry's most demanding cedants. Our high offer-to-bind ratio means we are one of the more selective reinsurers, another advantage of our size and platform. While we like profitable growth, we have no pressure for top-line growth at the expense of profitability."

"Q3 2009 is of course a welcome contrast to the third quarter in 2008, which was our only very disappointing quarter since we started operations in 2006. The losses in 2008 were on the investment side; we had little credit risk, but we did have 30% of assets in global equities and commodities. We derisked the portfolio, and have amended our investment guidelines so that 85% or more of Flagstones assets will henceforth be in high grade bonds and cash. While we recognize that leaves some money on the table during a rally, it also means that Flagstone is now a purer play on underwriting skill and proprietary technology."

"We continue to look at ways to leverage our platform and provide value to shareholders," Mr. Byrne concluded.  "As significant shareholders in the company, our executive team's interests remain strongly aligned with those of all Flagstone shareholders, and we will continue to make decisions that result in growth and value creation."

The Company will host a conference call on Tuesday, November 3, 2009, at 9:30 a.m. (EDT) to discuss this release.  Live broadcast of the conference call will be available through the Investor Section of the Company's website at www.flagstonere.com.

The Company, through its operating subsidiaries, is a global reinsurance and insurance company that employs a focused and technical approach to the Property Catastrophe, Property, and Specialty reinsurance and insurance businesses. Flagstone Réassurance Suisse has received "A-" financial strength ratings from both A.M. Best and Fitch Ratings, and "A3" ratings from Moody's Investors Service.  Island Heritage and Flagstone Reinsurance Africa have received "A-" financial strength ratings from A.M. Best.

The Company is traded on the New York Stock Exchange under the symbol "FSR" and the Bermuda Stock Exchange under the symbol "FSR.BH". Additional financial information and other items of interest are available at the Company's website located at www.flagstonere.com.

Please refer to the unaudited September 30, 2009, Financial Supplement, which will be posted on the Company's website for more detailed financial information.

Contact:
Flagstone Reinsurance Holdings Limited, Hamilton
Brenton Slade, +1-441-278-4303