Fitch Ratings expects strong growth in offshore life reinsurance to continue, with Bermuda remaining the dominant primary jurisdiction.
Offshore reserves ceded by U.S. life insurers have nearly doubled since 2020, amounting to $1.3 trillion in 2025.
This growth reflects capital optimisation, strategic partnerships between insurers and alternative investment managers, sidecar creation and record annuity sales.
At year-end 2025, 72% of offshore reinsurance was affiliated, indicating that capital management was the main driver. The share of reserves ceded to reinsurers affiliated with alternative investment managers rose to 44% in 2025, up from 30% in 2021.
Bermuda accounts for most of the offshore reinsurance, representing 85% of the total in 2025. Fitch considers Bermuda’s regulatory regime to be increasingly robust and transparent, supported by Solvency II equivalence and NAIC reciprocal jurisdiction status. In 2024, Bermuda strengthened its regulations through its second consultation paper (CPII), leading to enhanced governance, higher fees, and greater conservatism to reserving and capital standards.
The ratings agency views other offshore jurisdictions, such as the Cayman Islands, as more susceptible to regulatory arbitrage, less robust, more flexible and less transparent.
Fitch analyses offshore reinsurance on a case-by-case basis, considering jurisdictional strength, capital standards and transaction structure. All metrics, including capitalisation, are reviewed on a consolidated basis, taking into account reserves ceded to offshore affiliates.
Fitch expects some moderation in sales growth for the full year 2026 but expects offshore reinsurance volumes to remain elevated, supported by partnerships between insurers and alternative investment managers, sidecars and block reinsurance transactions. It will continue to monitor risks associated with rapid growth and regulatory arbitrage outside Bermuda.
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