Flagstone Re CEO David Brown plans to step down on the completion of his company’s takeover by Bermuda reinsurer Validus Holdings.In a joint announcement last week, the companies said Validus had agreed to acquire Flagstone in a deal worth $623.2 million.Mr Brown told The Royal Gazette that if and when the deal is closed he intends to retire.The companies expect the merger to be completed in the fourth quarter of this year.Mr Brown, who co-founded Flagstone seven years ago in Bermuda with former executive chairman Mark Byrne, also spoke about the challenging times Flagstone has gone through in recent years.The company made a net loss of $326 million last year after heavy catastrophe losses on events including earthquakes in Japan and New Zealand.Since then, Mr Brown has led a streamlining of the Luxembourg-domiciled company, including the sale of Flagstone’s Lloyd’s unit and its stake in Cayman-based insurer Island Heritage, as well as the slimming down of its book of business.The cash-and-shares deal was worth $8.43 per share to Flagstone shareholders, representing a 19 percent premium over the company’s closing share price in New York on Wednesday, the day before the deal was announced.“We looked long and hard at our strategic options and we feel that this was a fair deal for our shareholders,” Mr Brown said in an interview.While he said he would step down on the closing of the deal he could not comment on the likely future of the his colleagues at Flagstone.“It really is too early to say,” Mr Brown said. “We literally have not sat down to talk about how the operations of the two businesses will be combined.”Validus CEO Ed Noonan also told this newspaper last week that it was too early to talk about the impact of the merger on jobs, but a note from a Merrill Lynch analyst expressed expectations of a “meaningful headcount reduction” at Flagstone because of the signficant overlap of business.Flagstone’s holding company is based in Luxembourg, and its operating headquarters is in Martigny, Switzerland. Its Bermuda underwriting unit, based in Wellesley House, on Pitts Bay Road, is a subsidiary of the Swiss company, Flagstone Reassurance Suisse, SA. Flagstone also has an office in Halifax, Nova Scotia and another in Hauppage, New York.Globally, Flagstone has almost 200 staff, around 40 of whom are based in Bermuda.Mr Brown is a well-known veteran of the Bermuda international business scene and has been a strong advocate of the Island over the years. The Englishman has been the chairman of the Bermuda Stock Exchange since 2000.Having come to the Island as an accountant in 1980s, Mr Brown was a partner at Ernst & Young. He also served as president of Centre Solutions, a subsidiary of Zurich Allied AG.Both Flagstone and Validus were founded in 2005 to exploit opportunities in the aftermath of Hurricane Katrina, the costliest natural disaster in US history.Flagstone created a truly global platform, and at one time had business interests or offices in Cyprus, South Africa, the UK, India, Canada, Puerto Rico and Dubai, as well as Bermuda and Switzerland.“We looked to spread our risks around the world - the idea was that we did not want to put all of our eggs in the US basket,” Mr Brown said.That would have been a successful approach, had the pattern of the previous 30 to 40 years continued, Mr Brown said. Instead, the last five years saw a relatively low level of catastrophe activity in the US, and a string of low-frequency, high-severity events occurring elsewhere in the world that punished Flagstone for its focus on non-US international business.Notable among these events were the earthquake in Chile in 2010, two quakes in Christchurch, New Zealand and last year’s devastating earthquake and tsunami in Japan, as well as floods in Australia and Thailand.Mr Brown felt that Flagstone’s business could integrate successfully with that of Validus.“We think very similarly and both companies have a very technical approach,” he said.The combination would benefit Flagstone shareholders, through the advantages of scale that the combined business will have, and also Flagstone clients, as Validus has stated that it hopes to retain most of Flagstone’s book of business, he added.