Bermuda has emerged as one of the most important jurisdictions in the global life reinsurance market, regulating about one-third of all asset-intensive reinsurance worldwide, despite accounting for only 3.5 per cent of total global life reserves, according to a new sector outlook from Kroll Bond Rating Agency.

The report touts Bermuda’s outsize role in annuity and pension risk transfer, as insurers worldwide turn to reinsurance to manage pressures driven by ageing populations and a widening retirement savings gap. At the same time, tighter regulatory scrutiny in the United States, United Kingdom and Europe elevate the value of Bermuda’s supervisory regime.

While Bermuda accounts for a small percentage of reserves, KBRA estimates it oversees about 34 per cent of global asset-intensive reinsurance, a segment dominated by annuity and pension risk transfer transactions. According to the agency, Bermuda has developed much regulatory credibility and depth in complex cross-border deals.

The findings come as offshore life reinsurance has been pulled into an increasingly politicised debate in the US.

An October Wall Street Journal article slammed the Cayman Islands’ growing role in reinsuring US life and annuity liabilities, questioning whether offshore jurisdictions are transparent enough about their capital reserves or who is watching over them.

Although the focus was on Cayman, the paper acknowledged that many of the largest offshore structures it cited were based in Bermuda, which holds more than 80 per cent of offshore-reinsured US life and annuity liabilities, compared with about 10 per cent in Cayman.

Bermuda’s industry has long argued that such coverage lumps together offshore regimes. Unlike Cayman, Bermuda operates under capital standards aligned with European Solvency II and has been designated a reciprocal jurisdiction by US regulators. KBRA echoed that distinction, stating that “given its adaptive and responsive regulatory framework, Bermuda has emerged as a leading jurisdiction for AIR”.

Meanwhile, the Bermuda Monetary Authority’s CP2 reforms, introduced in 2024, raised capital and valuation requirements for long-term insurers. Despite the tougher standards, KBRA said Bermuda long-term insurers had absorbed the requirements “while maintaining robust solvency and liquidity buffers”.

Bermuda’s long-term insurance sector has also demonstrated resilience under severe stress, according to stress testing from the regulator. The BMA said a simulated global financial crisis showed the sector’s “strong ability to withstand severe economic challenges”, even as the market expanded rapidly in 2024.

Total assets rose 19.1 per cent to $1.52 trillion, gross written premiums increased 17.8 per cent to $200.1 billion and net income more than doubled to $26.3 billion, driven by higher interest rates and investment returns. Despite the growth, the BMA said most insurers remained well capitalised, with the vast majority staying above minimum solvency thresholds even after being tested against sharp equity declines, widening credit spreads and other severe but plausible shocks.

The report pushed back against broader criticism of private credit, often associated with offshore life reinsurance.

KBRA insisted that “one-sided and negative” portrayals of private credit missed the mark, noting that investment-grade fixed income actually dominates Bermuda life reinsurer portfolios.

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