According to a recent report from Fitch Ratings, partnerships between North American insurers and alternative investment managers are expected to continue to keep growing over the near term, particularly through sidecars and offshore reinsurance platforms.
Analysts noted that most reserves are ceded to Bermuda, which implemented various enhancements to its regime in 2024, which ultimately increased the capital, oversight and granularity required to operate on the island.
“Life insurers are increasingly structuring sidecars and creating offshore reinsurance platforms, often with alternative investment managers, to support growth and optimize capital. These structures provide additional capital resources for (re)insurers, enabling expansion through inorganic transactions or organic retail annuity sales,” the analysts said.
Moreover, insurers often create sidecars, which are primarily located in Bermuda, to optimize capital, support growth, and also enhance earnings by raising capital from third-party investors.
“The increased formations of offshore reinsurance platforms and side-car vehicles, usually owned by alternative investment managers, have led to increased reinsurance transactions as the life insurance industry sheds capital-intensive legacy liabilities,” Fitch added.
“Offshore reinsurance platforms provide insurers with flexibility in managing capital requirements, new business volumes and reducing overall risk exposure. However, transactions involving large volumes can lead to cautionary levels of growth and counterparty credit exposure.”
All in all, Fitch expects insurers and alternative investment management partnerships to continue to grow over the near term, particularly through minority stakes, sidecars and offshore reinsurance platforms.
Activity in the life and annuity sidecar reinsurer space has been heating up.
Recently we reported on a newly announced life and annuities flow reinsurance sidecar-like structure established for F&G Annuities & Life, Inc. and backed by $1 billion of capital from Blackstone managed funds.
We also reported that Japan Post Insurance agreed its planned $2 billion investment into a new reinsurance co-investment vehicle, or sidecar, to gain access to the strategic returns from business activity of KKR’s U.S. life, retirement and annuities insurance and reinsurance company, Global Atlantic Financial Group.
Chariot Reinsurance (Chariot Re), the Bermuda-based life and annuity reinsurance sidecar company launched by MetLife, Inc. in partnership with investor General Atlantic, completed its first transaction recently, assuming $10 billion of liabilities.
While, senior executives at Reinsurance Group of America (RGA) said that the fee income flowing to the company from its third-party capitalised Ruby Re life reinsurance sidecar is already meaningful.
Just at the end of last year, Allianz sponsored a life and annuity focused reinsurance sidecar named Sconset Re Ltd.
Meanwhile, insurance and reinsurance broker Aon recently stated that interest in leveraging the reinsurance sidecar structure to support casualty exposures is continuing to build, with a number of new casualty reinsurance sidecars expected to launch later in 2025 and into 2026.
As a reminder, you can find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.
