North American life reinsurance grew significantly in 2024, driven by expanding partnerships between insurers and alternative investment managers, increased use of offshore reinsurance platforms, and a record year for annuity sales.
Fitch Ratings notes that reserves ceded by insurers—measured through reserve credit and modified coinsurance (modco) reserves reported in U.S. statutory filings—increased from $2 tn in 2023 to $2.4 tn in 2024.
Fitch highlights that collaborations between re/insurers and alternative investment managers have been a major driver of this growth.
These partnerships often involve sidecars and offshore reinsurance platforms, enabling life insurers to shed capital-intensive legacy liabilities more effectively.
By the end of 2024, Fitch estimates nearly 40% of ceded reserves were tied to entities linked to alternative investment managers, a trend continuing into 2025.
The agency also identifies growing use of offshore reinsurance platforms—primarily based in Bermuda—as another key factor.
Fitch notes that Bermuda’s regulatory framework, which introduced higher capital requirements and stronger oversight in 2024, remains attractive because it offers a more economic and flexible environment than the U.S. Together, Bermuda, Barbados, and the Cayman Islands accounted for about 95% of offshore ceded reserves in 2024, according to Fitch’s data.
Fitch attributes the surge in annuity sales to rising interest rates, an aging population, and strong capital positions across the industry.
Retail annuity sales reached a record $434 bn in 2024, marking the fourth straight year of record sales. While Fitch expects sales growth to slow in 2025 as interest rates stabilize near 4.50% by year-end, demand remains strong.
Fitch explains that insurers are increasingly using innovative reinsurance structures like sidecars and offshore platforms in partnership with alternative investment managers.
These structures improve capital management, enabling insurers to support higher business volumes while optimizing capital.
Sidecars typically assume all business from their sponsors, whereas reinsurance platforms often begin with sponsor business but expand to include third-party business.
Fitch cautions that rapid growth in these transactions can increase counterparty credit risk and requires continued monitoring.
Large block reinsurance deals have had mostly neutral effects on insurer credit ratings. While ceding insurers improve their business risk profiles, reinsurers take on complex liabilities but adjust key assumptions to manage them.
Fitch cites several high-profile transactions involving Lincoln National Corporation, MetLife, and Guardian Life Insurance Company and expects this pattern of large transactions to continue.
Publicly traded insurers often divest complex or lower-return liabilities to free up capital, while reinsurance consolidators—many backed by alternative investment managers—aim to scale and shift assets toward less liquid strategies using their investment expertise.
Fitch projects that offshore reinsurance will remain a growing part of the North American life insurance market, supported by strong annuity sales, continuing demand for capital optimization, and expanding partnerships.
