FLAGSTONE RE PROPOSED REDOMESTICATION FROM BERMUDA TO LUXEMBOURG

HAMILTON, Bermuda – 22 March, 2010 - Flagstone Reinsurance Holdings Limited (NYSE:FSR) announced that its Board of Directors is recommending to the shareholders a plan to change the Company’s place of incorporation from Bermuda to Luxembourg.  Flagstone’s shareholders will be asked to vote in favor of the proposal subject to the U.S. Securities and Exchange Commission (“SEC”) declaring effective the proxy statement/prospectus that Flagstone expects to file in connection with the redomestication.

If approved by shareholders, and subject to certain regulatory approvals and the satisfaction of other conditions, Flagstone expects the redomestication to take place over several months following shareholder approval. 

“After careful consideration of this decision, our Board of Directors and management team believe that changing Flagstone’s place of incorporation to Luxembourg is in the best interests of the Company and its shareholders,” said Flagstone’s Chief Executive Officer, David Brown.  “Luxembourg is a major financial center known for its stability as well as its financial sophistication, and we believe this move will increase our strategic and capital flexibility while maintaining our operating model and our long-term strategy.  This change will have no impact on our operations and in particular Flagstone will retain its substantial offices and operations in Bermuda, where we have conducted business since our founding.”

“We are pleased to have the opportunity to increase our presence in Luxembourg, where our investment management operations have been located for some time”, Flagstone’s Chairman Mark Byrne continued.  “Luxembourg has a network of excellent relations with major developed and developing countries around the world. And, in addition to our listing on the New York Stock Exchange, this change in incorporation has the potential to make a listing of our common shares on a European exchange more attractive.  We are proud of our unique global business and this change, which results in our holding and principal operating companies being in Europe, settles our identity as a European company with a substantial and important branch in the thriving Bermuda market.”

Flagstone has operated in Luxembourg for most of its corporate history and is familiar with its regulatory and legal environment. Flagstone’s existing office in Luxembourg will also become its corporate holding company office.

The Company’s reinsurance and insurance operations worldwide will continue to operate without material changes, and its principal operating center will remain in Switzerland. Flagstone will continue to maintain underwriting and executive offices in Bermuda and recognizes the important role that Bermuda plays in the global reinsurance market. 

Flagstone does not expect the redomestication to have any material change on its operations or financial results. 

Flagstone’s common shares will continue to trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “FSR” and on the Bermuda Stock Exchange.  Flagstone will continue to be registered with the SEC and remain subject to SEC reporting requirements, the mandates of the Sarbanes-Oxley Act of 2002, and the corporate governance rules of the NYSE.  Finally, the Company will continue to report its consolidated financial results in U.S. dollars using U.S. generally accepted accounting principles. 

Flagstone expects to file with the SEC a proxy statement/prospectus on Form S-4 in connection with the redomestication. This press release is not a substitute for the proxy statement/prospectus. Investors and security holders are urged to read the proxy statement/prospectus when it is available and any other relevant documents filed or to be filed by Flagstone because they contain or will contain important information about the proposed redomestication. The proxy statement/prospectus and other documents filed or to be filed by Flagstone with the SEC are or will be available free of charge at the SEC’s website (www.sec.gov).

Flagstone and its directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies in connection with the proposed redomestication. Information about Flagstone’s directors and executive officers will be available in the proxy statement/prospectus to be filed in connection with the redomestication.

About Flagstone Reinsurance Holdings Limited

Flagstone Reinsurance Holdings Limited, 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 Reassurance 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.

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

Investors:

Okapi Partners LLC

Bruce Goldfarb  or Pat McHugh                    +1-212-297-0720