Flagstone Reinsurance Holdings Limited, a Bermuda reinsurer, has finalised initial capitalisation of $715 million in private equity funding, it said yesterday.

Flagstone's formation was led by management from West End Capital, a Bermuda hedge fund management firm, Lehman Brothers Merchant Banking, part of the private equity business of Lehman Brothers, and Lightyear Capital, a New York-based private equity firm.

Flagstone is one in a wave of new reinsurance companies that formed on Bermuda late last year to take advantage of an expected rise in premium pricing after the industry sustained record losses from Hurricane Katrina, and other 2005 catastrophes.

"There is a significant demand for underwriting capacity as a result of the hardening market and the aftermath of Hurricanes Katrina, Rita, and Wilma," said chief executive David Brown, in a statement.

Flagstone's chairman is Mark Byrne. Both Mr. Byrne and Mr. Brown are principals of West End. Aside from its Bermuda office, Flagstone has also established operations in India and in Nova Scotia, Canada.