FLAGSTONE ANNUAL REPORT 2009
LETTER TO
SHAREHOLDERS
We are delighted to report on Flagstone’s results for the year ended December 31, 2009 – the most profi table year thus far for our organization.
Mark Byrne David Brown
The company’s fi nancial results for 2009 were excellent. Our diluted book value increased by 24.6% and our core operating results were strong, with a 74.7% combined ratio. Given that we re-allocated our assets to a conservative, high quality portfolio in October 2008, these impressive results are primarily a function of our underwriting returns and not movement in the value of our investment portfolio.
Flagstone’s total written premium for 2009 was $988.5 million, up 26.4% from 2008. For the year, our loss ratio was 37.3%, producing underwriting profi ts of $210.8 million. These excellent results were achieved without the benefi t of signifi cant reserve releases from previous years.
These fi gures are not the result of chance, but are instead a product of Flagstone’s deliberate and
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unwavering approach to underwriting and risk management. By adopting a clear and focused strategy that features diversifi cation, the expansion of our global platform, the application of industry- leading analytics and a commitment to attracting the very best localized talent, Flagstone has succeeded in shaping our own opportunities, oppor- tunities that we’ve maximized wherever possible.
It is precisely by adopting that approach that we met our objectives for 2009. We continued to grow and diversify our portfolio as planned, with the completion of the integration of our Lloyd’s platform, Marlborough/Syndicate 1861, accounting for a good portion of our top line premium growth. Our three year average premium growth rate is 48%, one of the highest in our peer group, while coupled with one of the lowest loss ratios. We believe we have developed a sustainable under- writing ‘edge’ and global machine for producing many business possibilities to which we can apply it.
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