Bermudian specialist catastrophe reinsurer Flagstone has rejected a takeover approach from a private equity firm, according to reports.

UK publication Insurance Insider says the unnamed “leading private equity firm” was attracted by Flagstone’s heavily discounted share price. 

Flagstone’s shares fell from a 52-week high of $US13.14 ($12.20) last December after it was found to be the most adversely affected reinsurer after the record first-quarter catastrophes, with its losses representing 21% of its 2010 year-end shareholder equity compared to a market average of around 9%.

Its share price hit a low of $US7.72 ($7.17) in May after it was put on ratings watch by Moody’s and questions surrounding its future viability emerged. It is currently trading in the range of $US8.20-8.30 ($7.62-$7.71).