Fitch Ratings has affirmed its ratings on Flagstone Reinsurance Holdings, Ltd. and subsidiaries (collectively Flagstone) and removed the ratings from Rating Watch Negative. The Rating Outlook is Stable. (A full list of ratings is included at the end of this release.)

Fitch’s rating actions reflects its view that Flagstone is no longer actively pursuing the acquisition offer it made to IPC Holdings, Ltd. (IPC) on July 1. IPC announced that its board of directors had approved a definitive amalgamation agreement with Validus Holdings, Ltd.

Fitch placed the ratings on Rating Watch Negative on July 6 due to concerns about how a combination of Flagstone and IPC’s insured portfolios would affect the combined entities’ risk-adjusted capitalization. At that time Fitch noted that IPC had received competing bids from other entities and that if IPC were to reject Flagstone’s offer, Fitch would remove the ratings from Rating Watch.

Flagstone’s current ratings reflect the company’s strong underwriting capabilities, high-quality and liquid investment portfolio, and benefits derived from the company’s diverse operating platform. Partially offsetting these positives are the effects on Flagstone’s competitive position of the company’s comparatively small capital base and short operating history. Additionally, Fitch believes that Flagstone is at a much earlier stage in its development than many of its peers, and that as a result, “key man risk” associated with the company’s senior management team is comparatively high.