Casualty sidecars surge in Bermuda as investors pivot to longer-duration yields: Fitch

The reinsurance sidecar market witnessed rapid growth throughout 2025, particularly in Bermuda, where a number of major re/insurers launched casualty reinsurance sidecars during the year, which demonstrates how investors have a growing interest in longer-duration casualty risk exposure that offers high yields and diversification from property catastrophe risk, says Fitch Ratings.

Highlighting the ILS market’s performance in 2025, Fitch said: “In addition to catastrophe bonds, the market benefitted from growth in sidecars, both in property (USD17.9 billion at YE 2025) and in non-property, including casualty risk (USD1.7 billion at YE 2025). Fitch expects continued growth in the alternative reinsurance capital market in 2026.”

Substantial growth during the second-half of 2025 resulted in a new record size for the collateralized sidecar marketplace, at $19.6 billion.

As noted, a number of Bermuda reinsurers launched casualty reinsurance sidecars in 2025.

In July, Ascot Group and Antares Capital partnered together to set up Wayfare Re, a $500 million sidecar for Ascot’s casualty book.

Then in August, Enstar, one of the largest legacy and run-off reinsurance specialists across the globe, launched its first direct third-party capital play, a $300 million casualty reinsurance sidecar named Scaur Hill Re Ltd.

“Other companies are also considering such arrangements. Investors have a growing interest in longer-duration casualty risk exposure that offers high yields and diversification from property catastrophe risk,” Fitch added.

“These investors are typically larger and more sophisticated, with a longer-term focus, such as private equity, that can take advantage of float, often investing in higher-risk assets such as high-yield private credit to support underwriting liabilities. Private assets add risk of valuation uncertainties, earnings volatility, impairments, and restructuring losses,” Fitch continued.

Whilst these arrangements offer capital efficiency and fee income to reinsurers, the rating agency cautions that this private capital trend could also reduce the relevance of reinsurers over time and lessen profitability as it adds capacity to an already competitive market pricing environment.

Fitch further noted that liquidity remains an issue, as investors will want to avoid costly disputes by having an exit option, such as through commutations or support from legacy providers.

“The casualty reinsurance investor market has potential for growth but will remain a small part of the ILS market in the near to medium term compared with property catastrophe,” Fitch added.

Find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.