Bermuda Leads as Primary Offshore Reinsurance Hub for US Life/Annuity

The 2025 AM Best report highlights Bermuda as the leading offshore domicile for U.S. life and annuity reinsurance, accounting for over 40% of total ceded reserves from U.S. life-annuity insurers in 2024. Bermuda's share surpassed 60% for reserves ceded in transactions effective in 2023 and 2024, underlining its dominant role in the global reinsurance landscape. Despite this leadership position, the growth rate of ceded reserves slowed to 6.4% in 2024, down from over 10% annual growth in the previous three years.

This report attributes Bermuda’s sustained prominence to its accessible regulatory environment, experienced legal and actuarial expertise, and capital efficiency benefits sought by insurers. The aging U.S. population and recent interest rate increases have driven strong annuity market expansion over the past two years; although the pace decelerated in 2024, continued growth is anticipated. U.S. life/annuity insurers are increasingly utilizing offshore reinsurance to manage capital requirements and balance sheet growth efficiently.

Affiliated offshore reinsurance dominates the market, with approximately 70% of offshore ceded reserves going to affiliates. Companies backed by asset managers and private equity make up 46% of reserves ceded offshore affiliates. While offshore reinsurance offers capital efficiency and cross-border diversification, it also introduces operational complexity and transparency challenges that can complicate financial analysis and regulatory oversight.

The report provides detailed data on reserve cessions, including the distribution of reserves assumed by different regions and rankings of the largest reinsurance transactions in 2024. These insights underline the strategic importance of Bermuda in global reinsurance strategies, particularly for U.S. life and annuity insurers facing evolving demographic and economic conditions.

Overall, the AM Best analysis underscores Bermuda’s role as a key reinsurance hub that supports U.S. insurers’ capital management and growth objectives amid a changing market environment.