Flagstone Reinsurance Holdings Ltd. saw its profits almost triple during the second quarter of 2008 as the class of 2005 reinsurer continued to expand its business.

The Bermuda-based company's net income rose to $41.9 million, or 49 cents per share, in this year's second quarter from $14.7 million, or 17 cents per share, for the same period last year.

Net income for the first six months of 2008 was also up at $74.8 million, or 87 cents per share, compared to $50.3 million or 64 cents per share during the corresponding period in 2007.

Gross premiums written similarly increased to $271.2 million from $181.3 million over the corresponding period, while operating income stood at an impressive $40.2 million, up from $16.6 million.

The firm's combined ratio improved markedly to 76 percent during this year's second quarter from 94.6 percent in 2007.

Flagstone chief executive officer David Brown said: "Our underwriting results were strong through the quarter and continue to be driven by fundamental results rather than reserve releases from prior periods.

"We continued to grow our business in a careful and tactical manner by continuing to provide world-class, value-added service to our clients.

"I am pleased to note that although we are able to grow our volume in a softening market, this growth was generated in an intelligent manner through new business generated through our global network of offices, expanding our deep relationships with existing valued clients, and redeploying capacity from inadequate programmes to more attractive risks.

"To find these attractive programmes, we have to analyse a large amount of business and be very selective. This means, as a global writer, we were impacted by some international losses, but the diversification in our book showed its value in producing an overall attractive underwriting result."

Flagstone chairman Mark Byrne, said: "The second quarter was a positive one for our organisation as we continued to build out our unique global platform. We finalised terms and integrated Imperial Re into our group and renamed it Flagstone Reinsurance Africa Ltd. and successfully issued the Valais Re Ltd. catastrophe bond into turbulent markets.

"We also have agreed to acquire a substantial minority position in Alliance Re of Cyprus. These steps are tangible progress in our diversification strategy and further demonstrate our capabilities in the capital markets."

FLAGSTONE Q2 Report Card

Net income: 1.9 million compared to $14.7 million in 2007

Combined ratio: 76 percent compared to 94.6 percent in 2007

Gross premiums written: $271.2 million compared to $181.3 million in 2007