ILS Capital’s Prospero Re Gets Bermuda Regulator Nod to Write Traditional Reinsurance

December 3, 2020

Prospero Re Ltd., a reinsurance company wholly owned by ILS Capital Management with $250 million in statutory capital, has received Bermuda Monetary Authority (BMA) approval of its amended business plan, allowing it to write traditional as well as collateralized reinsurance contracts.

As a result of the change in its business plan, Prospero Re is the first collateralized Bermuda reinsurance company approved to write both traditional and collateralized reinsurance, said ILS Capital in its announcement.

“We are pleased to have received the BMA’s approval of Prospero Re’s amended business plan. The ability to write traditional and collateralized business, together with our rated balance sheet, allows us to be more capital-efficient while writing attractive new business and further increasing diversification,” said Tom Libassi, co-founder and managing partner of ILS Capital.

“We intend to create in Prospero Re a low-leverage reinsurance company with sufficient capital to pay total losses that are expected to occur every 1,000 years. At the same time, we can offer investors attractive non-correlated returns, lower costs and even greater alignment of interests,” he added.

Leading up to the BMA approval, ILS Capital achieved two key milestones earlier this year that, together with regulatory approval of the Amended Business Plan, position it to deliver additional benefits to cedents and drive its continued growth:

  • In February, Prospero Re was assigned an “A” rating by Kroll Bond Rating Agency (KBRA), based on its Amended Business Plan, making it the first Bermuda-based collateralized reinsurance company to be rated.
  • In August, ILS Capital completed the first-ever securitization of trapped capital, solving a reinsurance industry problem that surfaced after the losses related to the natural disasters of 2017 and 2018 by unlocking capital that otherwise would have been unavailable to be redeployed. Implementation of Prospero Re’s Amended Business Plan is expected to reduce the amount of potential trapped capital in the future.

ILS Capital noted that a substantial number of current cedents have already agreed to purchase non-collateralized reinsurance contracts from Prospero Re, and several reinsurance brokers have approved Prospero Re as a non-collateralized counterparty.

About ILS Capital Management

ILS Capital Management Ltd. is an employee-owned, SEC-registered investment adviser with $320 million in assets under advisement, 13 employees, and four offices worldwide. ILS Capital invests in insurance and reinsurance contracts across geographic regions and lines of business, including property, marine, energy, crop, aviation, aerospace, and weather. ILS Capital launched its subsidiary, Prospero Re Ltd., in 2013 as a Class 3A segregated account reinsurance company in Bermuda. ILS Capital holds a substantial ownership stake in Producers National Corp., a Chicago-based insurance company focused on non-standard and commercial auto insurance. In 2020, the firm formed a corporate member of Lloyd’s with investments in two syndicates offering specialty insurance products.

Source: ILS Capital Management

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