Bermuda hedge fund management company West End Capital is about to launch a new reinsurer, Flagstone Reinsurance Ltd., market sources said yesterday.

West End, which partnered with Bermuda reinsurer Montpelier Re earlier this year to form Rockridge, a Cayman Islands reinsurer, is setting up Flagstone as a stand-alone reinsurer.

Rockridge, which was set up with $91 million in capital, is a much smaller operation that Flagstone. Plans are to capitalise the company with between $750 million and $1 billion.It was incorporated as a Bermuda company earlier this month and is already licensed to sell reinsurance by the Bermuda Monetary Authority.

Brent Slade, West End?s director of development, yesterday said he could not comment on developments.

Flagstone is one of ten highly-capitalised reinsurers currently setting up in Bermuda.?This is a full-blown entry into the business,? one source said of West End?s launch.

The new wave of Bermuda reinsurers is forming to take advantage of an expected surge in pricing after Hurricane Katrina, the August 29 storm that devastated the Gulf Coast region and wiped up to $60 billion from insurance balance sheets. Rates for various types of insurance and reinsurance, particularly property-catastrophe policies, are expected to rise.

Flagstone?s business plan is largely to sell property-catastrophe reinsurance, and it could also sell a small percentage of short-tail casualty policies. Short-tail reinsurance contracts are generally settled in a year or two, unlike some casualty policies that can take decades to settle.

Flagstone?s chief executive is to be David Brown, who is currently a principal of West End, sources said. Mr. Brown was previously chief executive of Centre Reinsurance, a Bermuda company now effectively closed that focused on finite reinsurance.

The company will be based in the same building as West End?s Church Street office,In addition to Mr. Brown, some staff have already been secured, including half a dozen underwriters and a modeller.

Flagstone?s senior underwriter has been recruited from Bermuda insurance giant ACE Limited.

Flagstone, and at least eight of the other reinsurers forming ? Ariel, Arrow, Amlin, Harbor Point, Hiscox, Lancashire, New Castle and Validus ? already have approval from Bermuda regulators to operate on the Island.

The formation of the companies comes after the 2005 hurricane season caused massive insured damages for world reinsurers.

As a result fo the severity of the storms, catastrophe reinsurance premiums are expected to rise