ALIRT Research has reported a continued increase in US life insurance and annuity reserves being ceded to reinsurers in non-US jurisdictions, with Bermuda remaining the primary destination.
The firm’s analysis, based on year-end 2024 regulatory financial statements, indicates a significant shift in capital management and product growth strategies among US life insurers.
According to the report, reserves ceded to Bermuda-based reinsurers reached 38% of the total $2.4 trillion ceded by US life insurers in 2024, compared to 26% in 2020.
Bermuda accounted for 84% of all US life and annuity reserves ceded to non-US jurisdictions at the end of 2024. The study also found that 90% of the outstanding reserves ceded to Bermuda came from transactions completed between 2017 and 2024.
The analysis reviews the leading Bermuda reinsurer counterparties, the largest transactions completed in 2024 and through July 2025, and recent market entrants. It also details the top reinsurance exposures among US life insurers.
The report outlines potential benefits of foreign reinsurance arrangements, such as capital efficiency and capacity for growth, alongside potential risks, including concentration of exposure and regulatory scrutiny. It also examines how evolving US and Bermuda regulatory developments may affect the long-term viability of these strategies for individual insurers.
Bermuda has strengthened its position as a leading offshore hub, accounting for over 60% of new offshore reinsurance cessions in the past two years. Total US offshore life and annuity reserves surpassed $1.1 trillion by year-end 2024, with Bermuda representing roughly 35% of global reinsurance capacity.
Since 2016, the island’s life insurance reinsurance sector has attracted more than $50 billion in new capital, underscoring its expanding market footprint and appeal to global investors.
Regulatory oversight of these arrangements has intensified. The NAIC’s Life Actuarial Task Force is moving forward with new reserve requirements to increase transparency and address risk alignment concerns.
The Financial Stability Oversight Council has also raised concerns about the use of offshore reinsurance, particularly in cases where reinsurers are affiliated with the ceding company and operate under more lenient regulatory regimes.
Market dynamics have also shifted with the increasing use of sidecars – special-purpose reinsurance vehicles – by US insurers to manage risk-based capital requirements amid reserve growth. Ceded reserves through sidecars nearly tripled between 2021 and 2023 to $55 billion, highlighting a trend toward alternative risk transfer structures.
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