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Casualty reinsurance sidecars set for further expansion, AM Best says

AM Best estimates the sidecar market at between $17 billion and $19 billion, while noting property cat sidecar growth may slow as pricing weakens.

Reported · Written up by our desk · Reinsurance

AM Best said the reinsurance sidecar market is expected to keep growing, citing momentum in casualty sidecar structures as well as broader expansion in collateralized reinsurance.

The rating agency estimates the overall sidecar market size at between $17 billion and $19 billion, and frames sidecars as a key segment within the insurance-linked securities, or ILS, sector that has expanded in recent years.

AM Best said collateralized reinsurance can offer greater flexibility in structure, modeling, and perils, which supports future growth. It added that most sidecar capacity has historically been used for property catastrophe risk, though property cat sidecar growth may slow in the near term as the property cat market softens and underlying pricing weakens.

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