- US life insurers ceded $1.3 tn of reserves offshore in 2025, nearly double 2020 levels. Bermuda accounted for 85% of the total.
- Affiliated reinsurance represented 72% of offshore reserves, while alternative investment manager-affiliated reinsurers increased their share to 44% from 30% in 2021.
- Fitch expects offshore life reinsurance to remain elevated, supported by annuity sales, sidecars and block transactions, while regulatory arbitrage outside Bermuda remains a risk.
Offshore life reinsurance reserves ceded by US insurers reached $1.3 tn in 2025, nearly twice their 2020 level, according to Fitch Ratings. Bermuda remained the dominant jurisdiction, accounting for 85% of total offshore reserves.
Fitch expects offshore life reinsurance volumes to remain elevated as insurers continue using reinsurance for capital management and large annuity portfolios. Partnerships with alternative investment managers, sidecars and block reinsurance transactions are also contributing to growth.
Affiliated transactions represented 72% of offshore reinsurance at the end of 2025. Fitch said this concentration indicates capital management remains the main reason insurers transfer liabilities to offshore reinsurers.
Alternative investment managers have also expanded their presence in the sector. The share of reserves ceded to reinsurers affiliated with these managers rose to 44% in 2025 from 30% in 2021.
Record annuity sales have increased the volume of liabilities available for reinsurance. Insurers have also formed more partnerships with investment managers to combine liability origination with investment management capabilities.
Bermuda continues to receive most of these transactions. Fitch views its insurance regulatory regime as increasingly robust and transparent, supported by Solvency II equivalence and reciprocal jurisdiction status with the US National Association of Insurance Commissioners.
The jurisdiction strengthened its framework further in 2024 through changes known as CPII. The reforms introduced higher capital and reserving requirements, alongside additional governance and disclosure standards.
Fitch draws a distinction between Bermuda and several other offshore jurisdictions. It considers regulatory frameworks in the Cayman Islands and Barbados less robust and less transparent, with greater flexibility creating additional potential for regulatory arbitrage.
Those differences affect how Fitch assesses individual reinsurance arrangements. The rating agency reviews offshore transactions case by case, taking into account the jurisdiction, capital requirements and structure of each agreement.
Capitalization and other credit metrics are assessed on a consolidated basis. Fitch includes reserves transferred to offshore affiliates when evaluating the financial position of insurance groups.
The agency expects insurer partnerships with alternative investment managers to remain an important source of offshore reinsurance business. Sidecar structures and transactions involving existing blocks of life and annuity liabilities should provide additional volume.
Bermuda is expected to retain its leading position because of its established life reinsurance sector and strengthened regulatory structure. Fitch will continue monitoring rapid growth in offshore transactions and the potential for regulatory arbitrage in jurisdictions outside Bermuda.
