Zambia-based international reinsurer Klapton Reinsurance has been upgraded to a positive outlook by credit rating agency Moody’s, while the company has also affirmed Klapton Re’s Insurance Financial Strength Rating (IFSR) of Caa1.
Moody’s explains that these changes reflect Klapton Re’s growing premium size and market influence as a smaller reinsurer focused on less mainstream reinsurance in global markets, good diversification of insurance risks and reported profitability, and the potential to strengthen its financial profile if the new underwriting business develops smoothly.
In 2025, Klapton Re reported insurance revenue of approximately $3.1 billion ($135 million), up from $3 billion ($133 million) in 2024, as the company scaled back growth and focused on improving capital adequacy and consolidating underwriting quality.
Insurance services results will increase from US$370 million ($17 million) in 2024 to US$668 million ($30 million) in 2025, with the combined ratio improving to 78% from 88% in 2024. Despite strong reported profitability, Moody’s believes there is significant uncertainty about future profitability due to its long-tail exposure to the United States and expects claims development to be slow.
The credit rating agency said, “The turn to positive in the outlook reflects the steps the company has taken to strengthen its financial flexibility and capital adequacy, as well as our expectation that the company will demonstrate reduced uncertainty over the next 12 to 18 months as the book matures and claims development patterns become clearer.”
As the reinsurer vigorously expanded its commercial insurance business in North America, its above advantages were offset by increases in products and reserves.
Klapton Re also has significant long-tail risks, capital adequacy remains weak as premium growth outpaces growth in shareholders’ equity, asset quality is relatively poor as exposure to Zambian government debt remains significant, and financial flexibility is limited due to its relatively narrow private ownership, although its recent listing will improve access to capital once it secures more investors.
The credit rating agency said: “Despite this link, the ratings are currently not constrained by the sovereign, but rather by its own business, financial and governance risks. As these risks recede, over time we expect Klapton Re’s rating could be more than one notch higher than the Zambian sovereign.”
Moody’s explained that the reinsurer’s capital adequacy remained below regulatory capital adequacy requirements at the end of 2025 as the company continues to increase capital levels to meet recently introduced regulatory requirements.
Moody’s said: “Our gross underwriting leverage (GUL) metric also shows weakness in capital adequacy, which improved from 9.7 times at end-2024 to 9.3 times at end-2025, but remains weak. Following its listing on the Lusaka Stock Exchange earlier this year, the company is raising additional equity investment, which we expect will significantly strengthen its capital adequacy and enable the company to comply with regulatory capital requirement adequacy requirements.”
