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Bermuda reinsurance sidecars grow fourfold, reaching $375B in liabilities
A Morningstar DBRS report estimates the sidecar market has quadrupled since 2021, with about $375 billion in assumed liabilities, while many vehicles do not disclose their supporting assets to brokers.
Bermuda’s life and annuity reinsurance sidecar market has surged since 2021, with an estimated $375 billion in assumed liabilities, according to a Morningstar DBRS report cited by Insurance Business.
The report says the model lets insurers cede a defined block of policies, transferring parts of mortality or longevity risk to sidecars backed by institutional investors, who provide capital and share in profits. It also notes that growth accelerated to about 32% per year over the past four years and that major carriers have set up vehicles in Bermuda and the Cayman Islands with alternative asset managers including KKR, Apollo, Blackstone, and PIMCO.
For carriers, the appeal includes access to alternative asset classes such as private credit, infrastructure, and mortgage loans to support asset-liability matching, plus capital relief through Bermuda’s NAIC-qualified jurisdiction status and reduced collateral requirements. Insurance Business says commonly ceded business includes fixed annuities, fixed indexed annuities, multiyear guarantee annuities, structured settlement annuities, and pension risk transfers.
A key concern highlighted for brokers is investment disclosure, as many life and annuity sidecars do not publicly reveal their investment allocations. Where data exists, Morningstar DBRS found wide variation in asset mixes, with some sidecars concentrated in corporate bonds while others hold material exposure to asset-backed securities, mortgage loans, and investment fund structures.