ILS Capital's Prospero Re Obtains Bermuda Monetary Authority Approval of Amended Business Plan to Support Growth

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Hamilton, Bermuda - 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 and collateralized reinsurance contracts, ILS Capital announced today. Under the Amended Business Plan, Prospero Re retains the benefits of the collateralized reinsurance model while adding an element of leverage that is more reflective of traditional reinsurers.

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.

Tom Libassi, Co-Founder and Managing Partner of ILS Capital, said, “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. 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.”

ILS Capital also 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.