Sidecar growth builds in ceded reinsurance, casualty, and MGA/capital-light platforms: Guy Carpenter

With reinsurance sidecars having emerged as a key capital instrument for re/insurers aiming to utilise third-party capital, the current growth and momentum within the space has been concentrated in ceded reinsurance strategies, casualty-focused portfolios; and MGAs, MGUs and capital-light entities, according to broker Guy Carpenter.

In its 2026 1/1 reinsurance renewals report, the broker emphasised that while sidecars are not new to the market, there has been increased activity for various insurance businesses throughout 2025.

“We see the growth in 3 main areas: ceded reinsurance strategies, where investors take a share of a cross-section of a company’s outwards program; casualty-focused portfolios; and MGAs, MGUs and capital-light entities, which are becoming important players in their relevant market segments. This is part of a larger trend in which insurance businesses seek additional sources of capacity from capital markets, and investors aim to get direct access to insurance risk,” the broker said.

Moreover, Guy Carpenter noted how throughout 2025, sidecar transactions spanned across property, casualty and multiline classes of business.

“Features such as sliding-scale commission, sponsor co-investment and structures where sidecars are “following” vehicles have been successful in demonstrating cedents’ alignment with investors,” the broker explained.

Adding: “For property-exposed businesses, structures ceding business net of catastrophe XoL reinsurance have helped to optimize risk-return profiles for investors while meeting capitalization needs of sponsors.”

The broker also outlined how there has there been a number of sponsors placing casualty sidecars, complementing traditional reinsurance capacity and gaining access to capital markets.

As we’ve previously reported, a number of new casualty sidecars were launched or expanded in the latter half of 2025, with significant players like Ascot, MultiStrat, and Enstar involved.

The broker observed that the high interest rate environment, the changing focus of large asset accumulators away from life and annuity products, and the overall health of insurance returns have contributed to the growth of these structures.

Switching over to MGAs/MGUs, Guy Carpenter said: “Another key motivation for sidecars has been for MGAs/ MGUs to have greater access to capacity, which provides stability and improved economics for their businesses. As with most sidecar structures, the key elements of balancing alignment of interests and economic outcomes are crucial for successfully executing these types of arrangements.”

As well as this, the broker emphasised that the ability for investors to create higher-yielding asset portfolios has allowed for elevating ceding commission terms to be passed to cedents.

“Cedents have been comfortable exchanging elevated commission levels for alignment mechanisms, such as sliding-scale commission structures and in re-assuming tail risk by providing capital leverage through loss ratio caps to investors or structuring forward exit options through the use of legacy reinsurance markets,” Guy Carpenter noted.

It appears that the positive trend observed in the market during 2025 is anticipated to persist, with Guy Carpenter forecasting that several new sponsors will join the sidecar market in 2026.

“We expect new sponsors to access the market in 2026, existing sponsors to continue to grow and diversify their access to capital within existing structures, and new structures to be developed, oriented toward whole account and follow facility solutions,” Guy Carpenter concluded.

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