Flagstone Provides Claims Estimates For Hurricanes Gustav And Ike

Hamilton, Bermuda - 16 September, 2008 - Flagstone Reinsurance Holdings Limited (NYSE:FSR) announced today that its preliminary estimate of claims relating to its exposure to Hurricane Gustav are currently expected to be approximately $30 million, and exposure to Hurricane Ike are currently expected to be approximately $55 million, all numbers being net of reinstatement premiums. Flagstone's loss estimates are based on its proprietary modeling analysis, the assessment of individual treaties and client data. These preliminary loss estimates will be refined as additional information is received from cedants. Because these are early estimates there exists the possibility of significant revisions as further data becomes available.

Flagstone's investment strategy is to allocate across multiple asset classes in order to achieve superior risk adjusted total returns in the medium term. Because these allocations include several global equity indices, and commodities, Flagstone's total return for Q3 2008 as of today is approximately -4%. In accordance with the Company's accounting policy the unrealized mark to market gains and losses emanating from its investment portfolio are recorded through net income rather than as an adjustment to book value through other comprehensive income.

Flagstone has modest exposure to several specific situations that are concerning the market. Specifically, Flagstone has zero credit or counterparty exposure to Lehman Brothers. Regarding further counterparty and credit exposure, Flagstone has less than $1 million of net exposure to AIG bonds and receivables, less than $1.5 million of Wamu structured mortgage securities, no sub-prime securities and less than $2 million of Alt A securities. Furthermore, Flagstone does not hold any FNMA or FHLMC preferred or common shares.

About Flagstone Reinsurance Holdings Limited

Flagstone Reinsurance Holdings Limited, through its operating subsidiaries, is a global reinsurance and insurance company that employs a focused, technical approach to the Property, Property Catastrophe, and Specialty reinsurance and insurance businesses. Flagstone Reassurance Suisse SA has an "A-" financial strength rating from both A.M. Best and Fitch Ratings, and an "A3" rating from Moody's Investors Service.

Cautionary Statement Regarding Forward-Looking Statements

This report may contain, and the Company may from time to time make, written or oral "forward-looking statements" within the meaning of the U.S. federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the Company's control, which could cause actual results to differ materially from such statements. In particular, statements using words such as "may", "should", "estimate", "expect", "anticipate", "intend", "believe", "predict", "potential", or words of similar import generally involve forward-looking statements.

Important events and uncertainties that could cause the actual results to differ include, but are not necessarily limited to: market conditions affecting the Company's common share price; the possibility of severe or unanticipated losses from natural or man-made catastrophes; the effectiveness of our loss limitation methods; our dependence on principal employees; the cyclical nature of the reinsurance business; the levels of new and renewal business achieved; opportunities to increase writings in our core property and specialty reinsurance and insurance lines of business and in specific areas of the casualty reinsurance market; the sensitivity of our business to financial strength ratings established by independent rating agencies; the estimates reported by cedents and brokers on pro-rata contracts and certain excess of loss contracts where the deposit premium is not specified in the contract; the inherent uncertainties of establishing reserves for loss and loss adjustment expenses, our reliance on industry loss estimates and those generated by modeling techniques; unanticipated adjustments to premium estimates; changes in the availability, cost or quality of reinsurance or retrocessional coverage; changes in general economic conditions; changes in governmental regulation or tax laws in the jurisdictions where we conduct business; the amount and timing of reinsurance recoverables and reimbursements we actually receive from our reinsurers; the overall level of competition, and the related demand and supply dynamics in our markets relating to growing capital levels in the reinsurance industry; declining demand due to increased retentions by cedents and other factors; the impact of terrorist activities on the economy; and rating agency policies and practices.

These and other events that could cause actual results to differ are discussed in more detail from time to time in our filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by U.S. federal securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.