S&P affirms Validus

Standard & Poor's said it affirmed its A financial strength rating on Validus Reinsurance Ltd. and its BBB+ counterparty credit rating on the holding company, Validus Holdings Ltd. The outlook remains stable.

The rating action is related to Validus' plans to acquire Flagstone Reinsurance Holdings S.A. for $2 cash and 0.1935 Validus common shares per Flagstone common share.

"Upon completion of the transaction, Validus expects to strengthen Flagstone's reserves by $76 million, take $59 million of other charges and record a $58 million bargain purchase gain," said S&P credit analyst Jason Porter in a news release.

"The acquisition will boost Validus's capital base by almost $800 million with additional shareholder equity and Flagstones junior subordinated debt. Although Validus could potentially have the largest property catastrophe book in Bermuda, the overall business mix shift will be modest," Porter said.

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