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NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings today revised the Rating Watch on Flagstone Reinsurance Holdings, S.A. (NYSE: FSR) and subsidiaries (collectively Flagstone) to Evolving from Negative. A full list of ratings is included at the end of this release.

The Rating Watch revision follows the Aug. 30 2012 joint announcement by Flagstone and Validus Holdings, Ltd. (Validus) that Validus would acquire Flagstone in a transaction valued at $623 million, including $148 million in cash and 0.1935x Validus voting common shares per Flagstone share. The transaction is expected to close late in the fourth quarter of 2012.

The Rating Watch Evolving reflects Fitch's expectation that if the transaction closes at the terms described above, the agency will bring Flagstone's ratings in line with Validus' ratings.

Validus currently has the same ratings as Flagstone and a Positive Rating Outlook. Fitch expects to review the ratings of Validus as part of its normal annual review process prior to the expecting closing of the purchase of Flagstone.

Conversely, if the transaction failed to close at the terms described above, Fitch would likely downgrade Flagstone's ratings.

Fitch has revised the Rating Watch to Evolving from Negative for the following ratings.

Flagstone Reassurance Suisse SA:

--Insurer Financial Strength 'A-'.

Flagstone Reinsurance Holdings, S.A.

--Long-term Issuer Default Rating (IDR) 'BBB+';

--$120 million of floating rate subordinated debentures due Sept. 15, 2036 'BB+';

--Euro13 million of floating rate subordinated debentures due Sept. 15, 2036 'BB+';

--$25 million of floating rate subordinated debentures due Sept. 15, 2037 'BB+'.

Flagstone Finance S.A.

--Long-term IDR 'BBB+';

--$100 million of floating rate subordinated debentures due July 30, 2037 'BB+'.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--Insurance Rating Methodology (Sept. 22, 2011).

Applicable Criteria and Related Research:

Insurance Rating Methodology

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018 ]

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