Bermuda's insurance-linked securities (ILS) market is on pace for its strongest year for new formations in nearly a decade, as the Bermuda Monetary Authority (BMA) reports rising global investor appetite for ILS and alternative reinsurance capital structures.
The island's dominance in the sector is well established. Bermuda-based insurers accounted for approximately 92% of global alternative capital in 2024, with ILS funds now representing roughly 8% of the island's regulated funds universe, up from 5% a year earlier, and total net asset value reaching $13.71 billion.
First-quarter 2026 formation figures extended that momentum. Bermuda registered 20 new insurers in Q1 alone, a pace that would match the 80 formations recorded in 2022 if sustained, compared with 58 for the full year of 2025.
Restricted special purpose insurers led the count with seven registrations, while Class E insurers, focused on long-term and life reinsurance, added six more.
The R-SPI structure, established by the BMA in 2009 as noted by international law firm Kennedys, is designed as a fully collateralized transformer vehicle in which liability is capped at available collateral.
A single registered R-SPI can also function as a program structure, used across multiple bond series over many years – meaning annual registration figures alone understate total catastrophe bond activity.
Mellisa Burgess, director of supervision at the BMA, said the jurisdiction's role centers on connectivity. "Bermuda continues to serve as a premier jurisdiction for connecting global capital to insurance and reinsurance risks," she said.
That position carries structural advantages, though not without challengers. The Maples Group, an international law and fiduciary services firm, has assessed that Bermuda and the Cayman Islands represent the two leading ILS domiciles globally, while noting that Bermuda's position "is not unassailable" and the Cayman Islands could challenge its lead if market participants grow dissatisfied with Bermuda's regulatory approach.
The UK and Singapore are identified as jurisdictions to watch, though each faces its own structural uncertainties.
Bermuda's most durable differentiator is regulatory. It remains one of only two jurisdictions holding recognized equivalence with both the EU and the US, a dual status that none of its competitors currently hold.
A key operational advantage has been in place since August 2021, when the BMA reduced R-SPI approval timelines for catastrophe bond transactions to three business days, with no full business plan required and applications accepted on any business day.
Before that initiative, the equivalent process could take weeks in other jurisdictions, per Walkers law firm. In February, the BMA issued updated licensing guidance formalizing pre-application consultations as competition from Asia-Pacific hubs grows.
The BSX data reinforces the picture. Last year, the Bermuda Stock Exchange captured over 93% of global ILS issuance, adding 209 new listings – a 34% increase – and closing 2025 with $65 billion in total nominal outstanding value, up 16.4% year on year.
Full-year catastrophe bond issuance reached $25.6 billion, a 45% increase over the prior-year record of $17.7 billion and the first-time annual issuance has exceeded $20 billion.
