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Reinsurance sidecar ceded reserves rise to over $90bn in 2025
AM Best attributes the surge to strong U.S. annuity sales and says reinsurance sidecars have been used to add capital and manage risk-based capitalization.
Reinsurance sidecar structures have expanded rapidly, with total ceded reserves climbing to over $90 billion in 2025, up from $64 billion in 2024 and $55 billion in 2023, according to AM Best, as strong U.S. annuity sales continue to drive formations.
AM Best said individual annuities have seen significant growth over the last few years amid rising interest rates, though growth rates cooled slightly in 2025. The rating agency also noted that reinsurers and insurers have increasingly used sidecars to provide surplus relief and capacity, with leverage through reinsurance leverage increasing since 2019.
The report describes how many property and casualty sidecars can have finite lives that fund short-term risks, while some transactions, such as reinsuring a block of fixed-indexed annuities, can be structured to last for decades. AM Best added that deals can involve reinsuring existing blocks of business, new business only, and in some cases both flow and legacy blocks.
Bermuda remains the dominant hub for these collateralized structures due to its regulatory framework for special purpose insurers and its status as a leading domicile for alternative capital. AM Best also cited Prismic Life Re as an example, saying a subsidiary agreed to reinsure a yen-denominated, in-force block of whole life and annuity policies from Daiichi Life, pointing to growing potential for sidecars in Japan.
The rating agency said several sidecars have also expanded to third-party business and that new sidecars set up within the last two years include structures domiciled outside Bermuda, though the article text cuts off as it begins to detail those jurisdictions.