NEW YORK (AP) — Insurance and reinsurance provider Validus Holdings Ltd. is buying Flagstone Reinsurance Holdings S.A. in a cash-and-stock deal valued at nearly $600 million.

The Bermuda-based company said Thursday that the acquisition will strengthen its position in catastrophe risk and boost its client base.

Flagstone, which had been exploring its strategic options, said its board unanimously approved the transaction. Its stock surged $1.32, or 18.6 percent, to $8.37 in morning trading. Over the past year, the shares have traded between $6.41 and $9.53.

Validus will pay $8.43 per Flagstone share, a 19 percent premium to the company's Wednesday closing price of $7.06. Each Flagstone shareholder will receive 0.1935 Validus voting common shares and $2 for each Flagstone share.

Flagstone currently has about 71.1 million outstanding shares, according to FactSet.

Validus says the buyout has an equity value of $623.2 million. It has secured agreements from investment funds associated with Lightyear Capital and Trilantic Capital Partners, which own about 22.5 percent of Flagstone's outstanding stock, to vote in favor of the deal.

The acquisition is expected to close in the fourth quarter. It still needs the approval of Flagstone shareholders and regulatory approvals.

Shares of Validus added 4 cents to $33.28.