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Offshore reinsurance share of ceded annuity reserves tops 50% in 2025
AM Best said offshore arrangements represented almost 56% of ceded annuity reserves in 2025, driven by heightened use of modco and a shift toward unaffiliated deals.
Offshore reinsurance arrangements accounted for a growing share of ceded annuity reserves during 2025, according to a Best’s Special Report from AM Best, as insurers looked for ways to manage capital needs in a more competitive reinsurance market.
AM Best found that offshore arrangements represented almost 56% of ceded annuity reserves in 2025 when modified coinsurance, or modco, reserves were included. Bermuda remained the largest offshore jurisdiction, though the Cayman Islands gained market share during the year, which AM Best linked to newly established sidecars.
The report also pointed to changes in the balance between affiliated and unaffiliated transactions. Unaffiliated offshore reinsurance deals exceeded affiliated transactions in 2025 for the first time in three years, with the 10 largest unaffiliated transactions reaching a combined value of more than $107 billion, compared with about $35 billion across the 10 largest transactions in 2024.
AM Best said the increased reserves transferred to offshore affiliated reinsurers was largely associated with insurers backed by private equity firms and asset managers. The agency also noted that cross-border reinsurance can raise operational challenges and make some arrangements harder to assess, even though it can help insurers manage risk-based capital requirements.