NEW YORK (Bloomberg) — Flagstone Reinsurance Holdings Ltd., the Bermuda-based company formed in response to the 2005 hurricane season, said it doesn't use a formula to calculate bonuses for top executives and will disclose more about the payouts this year.

Volatility in the reinsurance industry means that "pure quantitative performance measures are not the most appropriate method of rewarding executive performance," the reinsurer said in a September 11 letter to the Securities and Exchange Commission that was made public this week. Flagstone said it doesn't have "a formulaic bonus plan".

The disclosure came in response to a July 24 request from the SEC for more information on how the reinsurer awards bonuses. Correspondence with the SEC may be released 45 days after a review is closed.

Flagstone said a compensation committee has discretion to award bonuses based on the performances of the company and the executive. The reinsurer said in a November 11 letter to the SEC that it can't reveal all goals linked to cash bonuses for its top three executives because the disclosures would cause "competitive harm".

Executive chairman Mark Byrne and chief executive officer David Brown each received a $422,500 cash bonus in 2008. Chief financial officer Patrick Boisvert got $200,000.

"When we file our 10K in a month or two there will be more disclosures related to the SEC's request," William Fawcett, general counsel for Flagstone, said on Tuesday in a phone interview from Hamilton.

Kevin Callahan, a spokesman for the SEC, said the agency doesn't comment on individual filings. The agency said on December 4 it had completed the review of Flagstone's disclosures.