What does the future hold for Flagstone Reinsurance Holdings S.A.? Change. After an 18-month analysis of its underwriting strategy, the reinsurer has decided to concentrate primarily on its property/casualty catastrophe business, as well as its highest-margin short-tail specialty lines of reinsurance business. Flagstone contends that these businesses will enable it to produce the highest returns on equity, while reducing its focus on businesses that absorb capital but produce less attractive returns.
As a result, Flagstone has commenced a formal process to divest its ownership positions in its Lloyds and Island Heritage operations. The company expects these divestitures to lower its gross written premium by approximately $300 million per year without any impact on expected return on equity, as well as cutting expense savings by reducing infrastructure and the consequent requirement for operational support.
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