Moody's says it believes Validus will receive “some financial and strategic benefit, albeit small” from its acquisition. It will also make Validus the largest Bermuda writer of property catastrophe reinsurance.

The ratings agency threw-up a cautionary flag, saying that with the transaction, Validus' debt could rise modestly because of the cash outlay and the assumption of $250 million of Flagstone's debt.

Both A.M. Best and Fitch ratings also say Validus' ratings and outlook remain unchanged by the proposed deal. Both ratings agencies cite Validus' strong financial position and historically strong operating performance.

Fitch says Validus' financial leverage could increase modestly immediately following the transaction, “but should remain well below median guidelines for Validus' current rating category.”

For Flagstone, A.M. Best put Flagstone's A- financial strength rating under review with developing implications, reflecting “uncertainty around the future plans Validus may have for Flagstone, the possibility of the deal not closing due to risks beyond the parties' control and this occurring during the peak of wind season.”

Best notes that Flagstone's ratings had been assigned a negative outlook in 2011 because of the group's “historically weak operating performance and concerns over their enterprise risk management capability.” But Best says the company made “significant progress” in strengthening its ERM program, which may have made the organization more appealing to Validus.

For its part, Fitch revised its Rating Watch to “evolving” from “negative” for Flagstone. Fitch says this reflects expectations that it will bring Flagstone's ratings in line with Validus' ratings if the deal closes as expected. While both companies are currently rated A-, Validus has a positive outlook.