KBRA Affirms IFSR for Prospero Re Ltd.
4 Jun 2025 | New York
KBRA affirms the A Insurance Financial Strength Rating (IFSR) for Prospero Re Ltd. (Prospero Re). The Outlook for the rating is Stable.
The rating reflects Prospero Re’s strong risk-based capitalization, moderate underwriting leverage, high-quality investment portfolio, and robust liquidity and asset/liability management. Additional strengths include its diversified underwriting portfolio, seasoned management team, and favorable accident year results. As of December 31, 2024, Prospero Re reported a Bermuda Solvency Capital Requirement (BSCR) Coverage Ratio of 259%. While this marks a decline from 2023, the ratio remains in line with Bermuda market norms. KBRA considers both premium and reserve leverage to be moderate, despite increases in both metrics during 2024 due to a reduction in surplus. The company maintains a conservative investment strategy, with 78% of its cash and invested assets held in cash and money market funds as of December 31, 2024. Its liquidity ratios compare favorably to peer benchmarks, and its asset/liability mismatch at year-end remained well within internal targets. Prospero Re’s underwriting strategy includes U.S., specialty, and global quota share reinsurance, as well as specialty and property catastrophe reinsurance. The company actively seeks market dislocations to enhance portfolio performance. The management team brings deep experience in the Bermuda and London reinsurance markets and has strong expertise in underwriting, structuring, and pricing. Management continues to effectively execute on the company’s diversification strategy and its goal to grow writings directly against its own balance sheet. Over the past five years, Prospero Re has maintained accident year combined ratios below 100%, underscoring solid core underwriting performance.
Offsetting these strengths are weak calendar year results and limited market presence. In 2024, Prospero Re reported a combined ratio of 128.6% (2023: 105.3%), driven by elevated loss activity and adverse prior-year reserve development. With 2024 gross premiums written totaling $114 million, Prospero Re remains a small player in the global reinsurance industry, which may limit its competitive positioning and scale advantages.
Favorable capital trends or enhancements to the governance and risk management framework in line with the company’s maturation as a levered, multi-line reinsurer could result in positive rating action. Unfavorable capital trends, deterioration of the BSCR Coverage Ratio below targets provided to KBRA, material increases in investments in, and advances to, affiliates, a loss of one or more members of the management team without a suitable replacement, or an adverse change in risk profile could result in negative rating action.
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