NU Online News Service, March 22, 10:05 a.m. EDT

Flagstone Reinsurance Holdings Limited announced its board of directors is recommending a plan to change the company's place of incorporation from Bermuda to Luxembourg.

The reinsurer said today that shareholders will be asked to vote in favor of the proposal once a proxy statement filed with the U.S. Securities and Exchange Commission is declared effective.

Flagstone Chief Executive Officer David Brown said in a statement that the board believes the move is in the best interests of the company and its shareholders.

"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," he said.

Mr. Brown also said the change would have no impact on operations--"and in particular Flagstone will retain its substantial offices and operations in Bermuda, where we have conducted business since our founding."

Flagstone's Chairman Mark Byrne noted that the move would increase the firm's presence in Luxembourg, where the investment management operations have been located for some time.

"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," Mr. Byrne said.

"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," he said in today's statement.

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 Bermuda plays in the global reinsurance market. Flagstone does not expect the redomestication to have any material change on its operations or financial results.

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.

Flagstone said its common shares will continue to trade on the New York Stock Exchange 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.

The company announced it will also 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.