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

HAMILTON, Bermuda, Dec. 2, 2020 /PRNewswire/ -- 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.

ABOUT ILS CAPITAL MANAGEMENT
ILS Capital Management Ltd. is an employee-owned, SEC-registered investment advisor with $320 million in assets under advisement, 13 employees, and four offices worldwide. ILS Capital aims to generate returns by investing in insurance and reinsurance contracts across geographic regions and lines of business including property, marine, energy, crop, aviation, aerospace, and weather. The firm believes that thoughtful contract selection and tactical sector allocation, coupled with portfolio management analytics, enable it to seek to capture yield and generate attractive risk-adjusted returns.

ILS Capital launched its subsidiary Prospero Re Ltd. in 2013 as a Class 3A Bermuda reinsurance company. ILS Capital holds a substantial ownership stake in Producers National Corporation, 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