Sidecars are being increasingly used by Bermudian re/insurers to cover casualty risks, according to a new report.

Traditionally used to tap third party capital to cover property-catastrophe risk, sidecars are now being adapted for use in longer tail risks, analysts at S&P Global ratings found.

Re/insurers are transferring a broader range of risks into sidecars, the report states.

“Historically, casualty risk has not penetrated into the alternative capital reinsurance space, yet casualty sidecars now represent approximately 10 per cent of total sidecar capacity,” S&P said.

Three significant casualty reinsurance sidecars launched this year are listed: Everest Group’s Annapurna Re ($600 million, investor Stone Point); Hamilton Insurance Group’s Ada Re (undisclosed amount, investor Sixth Street); and QBE Re’s George Street Re ($550 million, investors Culpepper and Calidris).

It also lists more than $1.6 billion invested in 2025 in Bermudian sidecars, sponsored by Ryan Specialty, Enstar, Ascot Group and WR Berkley Corp, while Aspen Insurance and Axios Capital also launched casualty sidecars in 2024.

S&P points out key differences between sidecars formed to cover natural catastrophe and casualty risks.

“Because of the event-driven nature of the losses that ensue from such catastrophes, sidecars are typically highly collateralised to at least cover a one-in-200-year event,” the report states, adding that claims are usually settled quickly and sidecars usually have relatively short lifespans of one to three years.

“Casualty sidecars present a markedly different risk profile,” S&P said. “Claims develop over longer periods and may take years to come to fully emerge.

“This creates uncertainty about how much liquidity is required to cover the claims. Due to the claims' long-tail nature, casualty sidecars may have significantly longer lifespans or even operate on a more permanent basis.”

S&P added the extended claims development period means that casualty sidecars may operate with lower liquidity than their property counterparts and may adopt investment strategies that involve more illiquid or higher-yielding assets.

“This could allow investors to benefit from both underwriting returns and investment income, leveraging the longer duration of the casualty claims,” S&P added.

The report points out that the investor base for sidecars is diverse, comprising institutional investors such as pension funds and sovereign wealth funds, alongside specialised asset managers, private-equity firms, dedicated insurance-linked securities funds, and reinsurers.

The appeal for investors is in returns and risks that are largely uncorrelated with financial market conditions and attractive insurance returns.