Prospero Re Ltd., a reinsurance company wholly owned by ILS Capital Management, has received Bermuda Monetary Authority (BMA) approval of its new business plan, which allows it to write both traditional and collateralized reinsurance contracts.
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.
ILS Capital notes 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.
“We are pleased to have received the BMA’s approval of Prospero Re’s Amended Business Plan,” said Tom Libassi, Co-Founder and Managing Partner of ILS Capital.
“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,” he continued.
“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.”
In February, Prospero Re was assigned an “A” rating by Kroll Bond Rating Agency (KBRA), based on its new business plan, making it the first Bermuda-based collateralized reinsurance company to be rated.
And later, in August, ILS Capital completed the first-ever securitization of trapped capital, unlocking capital that otherwise would have been unavailable to be redeployed.
