Bermuda reinsurers and sidecars drive US life insurance sector’s expansion: ALIRT

A recent report from ALIRT Insurance Research suggests that steady growth amongst Bermuda reinsurers and sidecars are responsible for a significant portion of the U.S. life insurance sector’s expansion in recent years.

Findings from the firm’s recent report strongly indicate that Bermuda continues to strengthen its position as the leading overseas jurisdiction for life and annuity reinsurance ceded by US insurers.

ALIRT Insurance Research’s report shows that U.S. life insurers had approximately $2.7 trillion in ceded life and annuity liabilities at the end 2025.

The company noted that around $1.1 trillion of those liabilities had been transferred to Bermuda-based reinsurers, representing 40.7% of all ceded liabilities and 85% of liabilities ceded to non-U.S. jurisdictions.

In addition, ALIRT said that reinsurance activity within Bermuda has expanded rapidly in recent years.

The firm’s report found that between 2021 and 2025, reserves ceded to Bermuda more than doubled, while Bermuda’s share of total ceded U.S. life and annuity reserves also grew from 30.9% in 2021 to 40.7% in 2025.

ALIRT states that much of this growth has occurred since 2017.

According to the firm, approximately 92% of outstanding Bermuda-ceded reserves at year-end 2025 originated from transactions initiated between 2017 and 2025. The company also explained that activity has been driven by affiliated and third-party transactions covering annuities, life insurance, pension risk transfer business, structured settlements, and legacy insurance blocks.

As previously highlighted, ALIRT also identified continued growth in newly established Bermuda reinsurers and sidecar structures.

According to the firm, since 2017, newly established reinsurance entities in Bermuda have accumulated nearly $355 billion in assumed reserves, which constitutes a substantial portion of the market’s overall expansion.

ALIRT’s research is backed by rating agency AM Best, who recently highlighted how strong U.S. annuity sales helped drive a surge in reinsurance sidecar formations, as total ceded reserves managed to climb to over $90 billion in 2025, marking a solid increase from $64 billion in 2024, and $55 billion in 2023.

The agency also pointed how Bermuda remains the dominant hub for these sidecar structures, given the island’s reputation for being the leading global domicile for alternative capital.

ALIRT Insurance Research’s report also found that more than $73 billion of new Bermuda reinsurance transactions were completed by U.S. life insurers during 2025, with the firm noting that the ten largest transactions accounted for approximately $60 billion of that volume and also included a mixture of affiliated transactions, third-party reinsurance arrangements, and sidecar structures supported by outside investors.

Furthermore, ALIRT states that a range of commercial and strategic considerations have helped support the use of Bermuda reinsurance. These include greater flexibility in capital management, additional capacity to support new business, management of legacy insurance portfolios, as well as access to third-party sources of capital.

Simultaneously, the company clarified that recent regulatory developments in both Bermuda and the United States are anticipated to impact the future trajectory of the market.

ALIRT’s report points to measures such as enhanced liquidity testing, broader reporting obligations, reserve adequacy assessments and increased scrutiny of affiliated transactions and sidecar structures.

ALIRT also points out that there is growing interest in the Cayman Islands as an alternative jurisdiction for life and annuity reinsurance activity. However, whilst a number of new reinsurers and strategic partnerships have emerged in recent years, the firm states that Bermuda continues to maintain a leading position within the market.

The firm’s report concludes by highlighting that reinsurance has become a core component of risk and capital management strategies for many U.S. life insurers.

However, as the market continues to evolve, ALIRT stresses that insurers, regulators, and other stakeholders should continue to remain focused on balancing capital efficiency, financial strength, and policyholder protection.

You can read all about the many reinsurance sidecar investments and transactions over the history of the ILS market, including life and annuity vehicles, by visiting our comprehensive list of collateralized reinsurance sidecars transactions.