U.S. Life Insurers Trending Towards Bermuda Reinsurance
ALIRT Insurance Research, a firm specializing in insurance financial analytics, has published a compelling report detailing the growing trend of U.S. life insurers utilizing offshore reinsurance, specifically in Bermuda. This study highlights Bermuda's role as a primary destination for life and annuity reinsurance from U.S. insurers, offering key insights into industry trends and implications.
The analysis reveals that as of the end of 2025, U.S. life insurers had ceded approximately $2.7 trillion in life and annuity liabilities. Notably, $1.1 trillion of these liabilities had been transferred to reinsurers based in Bermuda, accounting for 40.7% of all ceded liabilities and approximately 85% of business with non-U.S. reinsurers. This indicates a strong preference for Bermuda due to its favorable reinsurance environment.
The report notes a remarkable increase in reserves ceded to Bermuda, with these reserves more than doubling from 2021 to 2025. During this period, Bermuda's share of U.S. ceded life and annuity reserves grew substantially from 30.9% to 40.7%, underscoring its expanding relevance in global reinsurance markets.
Expansion of Bermuda Reinsurance Activity
Since 2017, Bermuda's reinsurance market has experienced significant expansion. ALIRT reports that around 92% of Bermuda-ceded reserves as of 2025 stem from transactions initiated between 2017 and 2025. These transactions include a mix of affiliated and third-party reinsurance contracts across various life insurance and annuity products, highlighting the territory's strategic importance.
The establishment of new Bermuda reinsurers and sidecar structures has further bolstered the market's growth. Companies formed from 2017 onward have accumulated approximately $355 billion in assumed reserves. In 2025 alone, U.S. life insurers completed over $73 billion in new Bermuda reinsurance transactions, with the largest ten transactions making up around $60 billion.
Drivers and Regulatory Considerations
Key drivers for the preference for Bermuda reinsurance include enhanced capital management flexibility, increased capacity for new business, and legacy portfolio management. Access to third-party capital also plays a critical role. Regulatory focus on reserve adequacy, investment profiles, and counterparties remains a priority in this evolving landscape.
With regulatory changes anticipated in both Bermuda and the U.S., future market development may be influenced by new liquidity tests, expanded reporting duties, and closer scrutiny of affiliated transactions and sidecars. While the Cayman Islands are also being considered as a potential alternative for life and annuity reinsurance, Bermuda remains at the forefront. ALIRT concludes that reinsurance is integral to many U.S. life insurers' risk and capital management strategies, balancing capital efficiency with policyholder protection amidst evolving market dynamics.