Zambia-based international reinsurer Klapton Reinsurance has been assigned an upgraded positive outlook by credit ratings agency Moody’s Ratings, while the firm has also affirmed Klapton Re’s insurance financial strength ratings (IFSR) of Caa1.
Moody’s explained that these changes reflect Klapton Re’s increasing premium volumes and growing market presence as a smaller reinsurer focused on less mainstream cedants in global markets, its good diversification of insured exposures and reported profitability, and potential for strengthening of its financial profile if its new business written develops favourably.
In 2025, Klapton Re posted an insurance revenue of approximately ZMW 3.1 billion ($135 million), a jump from ZMW 3 billion ($133 million) in 2024, as it scaled back growth to focus on shoring up capital adequacy and solidifying underwriting quality.
The insurance service result strengthened to ZMW 668 million ($30 million) in 2025, up from ZMW 370 million ($17 million) in 2024, as combined ratio improved to 78%, from 88% in 2024. Despite strong reported profitability, Moody’s considers there to be significant uncertainty around future profitability due to its long-tail US exposures, where claims are expected to develop slowly.
The credit ratings agency said, “The change in outlook to positive reflects steps that the company has taken to strengthen its financial flexibility and capital adequacy, as well as our expectation that it is positioned to demonstrate reduced uncertainty in its large North American business written over the next 12 to 18 months as this book becomes more mature and claims development patterns more discernible.”
Due to the reinsurer’s significant expansion into commercial insurance in North America, its aforementioned strengths are offset by elevated product and reserving.
Klapton Re also has significant long-tail exposures, still weak capital adequacy as growth in premiums written has outpaced growth in shareholders’ equity, relatively weak asset quality because of still significant exposure to Zambian government debt, and limited financial flexibility due to its relatively narrow private ownership, albeit that its recent listing will improve access to capital once it secures additional investors.
“However, despite the linkage, the rating is not constrained by the sovereign at present, but rather by its own business, financial and governance risks. As these risks recede, over time, we expect that Klapton Re could be rated more than one notch above the Zambian sovereign,” said the credit ratings agency.
Moody’s explained that the reinsurer’s capital adequacy remains below the regulatory capital adequacy requirement at year-end 2025, as it continues to build up capital levels to meet the recently introduced regulatory requirement.
Moody’s said, “Weakness in capital adequacy is also visible in our gross underwriting leverage (GUL) metric, which improved to 9.3x at year-end 2025 from 9.7x at year-end 2024 but remains weak. Following its listing on the Lusaka Stock Exchange earlier this year, the company is in the process of raising additional equity investment, which we expect will strengthen its capital adequacy significantly and bring the company into compliance with the regulatory capital adequacy requirement.”
