Bermuda is still the leading offshore domicile in life reinsurance but AM Best says it shed market share in 2025 while Cayman’s share increased, driven by new sidecars from the United States.

The rating agency said offshore reinsurers accounted for almost 56 per cent of ceded annuity reserves in 2025. That growth has been driven by demand for annuities, although the pace of growth slowed in 2025 and 2026.

Bermuda is still the top offshore domicile for the business, AM Best said. However, its share of reserves from American life and annuity insurers slipped to 39.9 per cent in 2025 from 40.9 per cent a year earlier.

But Cayman’s share rose to 2.3 per cent from 2 per cent, mainly because of several new sidecars, the report said.

The competitive pressure is set to increase. Cayman has applied to the National Association of Insurance Commissioners for qualified-jurisdiction status, which would mean US insurers could face lower collateral requirements for using Caymanian-based companies, the same as they do with Bermudian-based companies.

Bermuda stayed prominent in the largest transactions of 2025. Five of the ten largest deals, with total ceded reserves of about $22.9 billion, involved Bermuda reinsurers.

They included business ceded by Metropolitan Life Insurance Co to Martello Re Ltd, by Metropolitan Tower Life Insurance Co to Chariot Reinsurance Ltd, by Allianz Life Insurance Co of North America to Sconset Re Ltd, and by Protective Life Insurance Co to Resolution Re Ltd.

The ten largest unaffiliated life and annuity reinsurance transactions totalled more than $106.9 billion in 2025, compared with $35 billion a year earlier. AM Best said unaffiliated deals exceeded affiliated transactions for the first time in three years.

The increasing involvement of private-equity firms in the life reinsurance sector, especially in Bermuda, has drawn the attention of regulators in the US and elsewhere and faced scrutiny in the media.

Last year, Bermuda was pulled into an offshore regulatory spat following a high-profile American media report critical of the Cayman Islands’ growing role in life and annuity deals.

A Wall Street Journal article, titled “Why Insurers Are Taking Your Money to the Cayman Islands”, raised concerns over the $75 billion in American life insurance liabilities reinsured through Caymanian-based firms. The piece claimed offshore reinsurers “don’t require [insurers] to hold as much extra capital in case their investments turn sour” and that they “also don’t necessarily have to say who is watching over the money”.

Cayman’s industry hit back in a public letter, calling the story misleading and defending its oversight regime.

Bermuda’s life reinsurers have more than $1.5 trillion of assets under management. Suzanne Williams, chief executive of Bermuda International Long-Term Insurers and Reinsurers, previously told The Royal Gazette that she sees more prospects for growth, particularly from Asia and the high-net-worth sector.

Deals in “asset-intensive reinsurance” generally involve the transfer of blocks of pensions, annuities or life insurance products from an insurer to a reinsurer. The reinsurer takes on both the liability and associated asset risks.

The practice helps to address the global pension protection gap, estimated at $1 trillion in a 2023 report by the Global Federation of Insurance Associations, and set to grow as populations age.

Alternative investment managers who own, wholly or partially, Bermudian reinsurers include Apollo (Athene and Athora), Sixth Street (Talcott Life Re), KKR (Global Atlantic), Carlyle Group (Fortitude Re), Brookfield (Brookfield Wealth Solutions) and Ares (Aspida).