Bermuda life sidecars quadruple to $375 billion, capital test looms

Morningstar DBRS estimates the Bermuda life and annuity reinsurance sidecar market at $375 billion of assumed liabilities, quadrupled in four years, and calls the island by far the largest market for these structures. Bermuda's Royal Gazette reports the finding, along with the agency's calculation that the market has grown at an annual rate near 32 percent since 2021. Underneath that total is a migration: a sidecar technique born in property catastrophe now does most of its work on life and annuity liabilities.

The structures are unchanged in outline from their property-cat years: an insurer shares risk with institutional investors by assuming an existing block of policies or an agreed share of new business, with investor capital supporting the liabilities and taking a share of profit in return. What has changed is the liability underneath. Bermuda's sidecars are concentrated in annuity-type products—fixed and fixed-indexed annuities, multiyear guarantee annuities, structured settlements, and pension risk transfers—and Morningstar DBRS says the model is now spreading to whole life policies. Newer vehicles are increasingly structured for flow transactions rather than purely static blocks, meaning they accept policies as they are written.

Growth is coming from both new vehicles and expansions inside existing ones: FCA Re, Ivy Re III, and Chariot Re are among the Bermuda sidecars established in 2025, and Chariot this week announced the completion of a $700 million capital raise. The established structures are the strategic layer—Athene and Apollo's ACRA vehicles, Global Atlantic and KKR's Ivy Re sidecars, and Prismic Re with Prudential, PGIM and Warburg Pincus—and those names show how thoroughly the capital relationship between insurers and alternative asset managers has become a Bermuda business model.

Morningstar DBRS says no known recaptures have occurred from the existing sidecars, and the agency treats that as a sign the market is building rather than churning: transactions remain in force while new business is added. But the absence of recaptures is not the same as a tested record, and the move into flow business and whole life will eventually put policy risk in these vehicles that no existing track record covers.

Bermuda's regulatory standing supplies the capital advantage beneath the structure: the island's qualified jurisdiction status with the US National Association of Insurance Commissioners lets US insurers take statutory credit for business ceded to Bermuda, often with reduced collateral requirements, freeing capital that might otherwise sit behind a transaction. For the asset managers on the other side, sidecars provide a pool of capital for originating investments and a stream of recurring management fees, and institutional investors gain a route into insurance-linked returns.

That route has already drawn warnings from the other major rating agency: AM Best has warned that reserve credits in offshore annuity reinsurance are rising faster than the collateral backing them, and as this publication has argued, the capital test behind the sidecar boom is whether those credits will survive the next solvency review. Morningstar DBRS's $375 billion estimate expands the scale of that test without changing its terms.

The market can keep compounding under current rules, or it can meet the first regulator that asks what collateral sits behind the reserves. The next meaningful number will be the size of the gap between reserve credits and the assets supporting them, measured at a moment when growth is no longer the only headline.