Bermuda’s life and annuity reinsurance sidecar market has quadrupled in four years to an estimated $375 billion of assumed liabilities, according to a new report from Morningstar DBRS.

The ratings agency said Bermuda was “by far the largest” market for the structures, which are increasingly bringing together insurers, alternative asset managers and institutional investors.

Originally associated with the property catastrophe reinsurance market, sidecars have increasingly moved into life and annuity business.

In simple terms, the structures allow insurers to share insurance risks with institutional investors. A sidecar can reinsure an existing group of policies or take an agreed share of new business, with investors providing capital to support the liabilities in return for a share of the profits.

Morningstar said the Bermuda market had grown at an annual rate of about 32 per cent since 2021, driven by the creation of new sidecars as well as the expansion of existing vehicles.

New Bermuda sidecars established in the market in 2025 included FCA Re, Ivy Re III, and Chariot Re. This week, Chariot Re announced the completion of a $700 million capital raise.

The island is also home to a number of established structures involving some of the biggest names in global insurance and alternative asset management, including Athene and Apollo’s ACRA vehicles, Global Atlantic and KKR’s Ivy Re sidecars, and Prismic Re, involving Prudential, PGIM and Warburg Pincus.

Morningstar said there had been no known recaptures from existing sidecars, meaning transactions were remaining in force while new business was added.

“These trends support continued expansion in both the number of sidecars and the amount of reserves assumed by these structures,” the report said.

The sidecars have so far concentrated largely on annuity-type products, including fixed and fixed-indexed annuities, multiyear guarantee annuities, structured settlements and pension risk transfers.

However, the model is spreading into areas such as whole life insurance, while newer sidecars are increasingly taking on “flow” transactions covering new policies as they are written rather than solely reinsuring existing blocks of business.

Morningstar said Bermuda’s regulatory status also helped make the island attractive. It highlighted the island’s qualified jurisdiction status with the US National Association of Insurance Commissioners. This enables US insurers to receive statutory credit for business ceded to Bermuda reinsurers, often with reduced collateral requirements, freeing up capital that might otherwise be tied to transactions.

For asset managers, meanwhile, sidecars provide capital to originate investments and generate recurring management fees, while institutional investors gain access to potential returns from the structures.

The rapid growth is also strengthening the connection between insurance and private credit, although Morningstar warned that limited public disclosure can make it difficult to determine how much sidecars are investing in private credit and other alternative assets.

Few publicly disclose detailed investment allocations, it said, leaving outsiders with limited visibility into the risks within their portfolios.

While the Cayman Islands is emerging as another sidecar domicile, Morningstar said Bermuda remains comfortably the largest market.