A new report from S&P Global Ratings highlights a structural shift in the sidecar market, as casualty reinsurance sidecars have grown to account for approximately 10% of total sidecar capacity. Driven by a wave of recent high-profile launches these vehicles are attracting alternative capital by offering returns largely uncorrelated with broader financial markets.
In its report, the agency outlines that sidecar investors typically enjoy a lower cost of capital than traditional reinsurers, while also highlighting that these Special Purpose Vehicles (SPV’s) give investors who have not participated in the insurance industry before easier direct access to insurance risks.
Addressing the rapid growth seen within property & casualty sidecars in recent years, S&P said: “The recent growth in the number of new sidecars reflects the broader range of risks that re/insurers are transferring into them.
“These vehicles’ evolving structures, together with supportive market conditions, have increased investor appetite for non-property catastrophe risks such as casualty re/insurance. Historically, casualty risk has not penetrated into the alternative capital reinsurance space, yet casualty sidecars now represent approximately 10% of total sidecar capacity.”
The rise of casualty sidecars has been growing since early 2025, as a number of Bermuda reinsurers launched casualty reinsurance sidecars on the island last year.
In July 2025, Ascot Group and Antares Capital partnered together to set up Wayfare Re, a $500 million sidecar for Ascot’s casualty book.
While in August 2025, Enstar launched its first direct third-party capital play, a $300 million casualty reinsurance sidecar named Scaur Hill Re Ltd.
Momentum has also continued into 2026. At the beginning of the year, we reported that QBE Re, the international reinsurance arm of the global insurance group, had sponsored its first casualty reinsurance sidecar vehicle, securing over $550 million in fully collateralised quota share reinsurance through George Street Re.
Then in June, we also reported that Everest Group had launched its first casualty reinsurance sidecar, Annapurna Re Ltd., with the firm also revealing an expectation of deploying $600 million of third-party capital through the structure.
“Historically, reinsurers have used sidecars to cover natural catastrophe risks such as hurricanes, earthquakes, and wildfires. Because of the event-driven nature of the losses that ensue from such catastrophes, sidecars are typically highly collateralized to at least cover a 1-in-200-year event. Claims are usually settled relatively quickly, providing investors with good visibility on how losses may develop and exit timelines. As a result, property sidecars maintain high levels of liquidity, limit investment risk to preserve collateral value, and usually have relatively short lifespans of one-to-three years,” S&P added,
Conversely, the agency notes that casualty sidecars present a different risk profile, due to the fact that claims tend to develop over longer periods and can take years to come to fully emerge.
As a result, this can create uncertainty about how much liquidity is required to cover the claims, and due to the claims’ long-tail nature, casualty sidecars may have significantly longer lifespans or even operate on a more permanent basis.
“The extended claims development period means that casualty sidecars may operate with lower liquidity than their property counterparts and may adopt investment strategies that involve more illiquid or higher-yielding assets. This could allow investors to benefit from both underwriting returns and investment income, leveraging the longer duration of the casualty claims,” S&P continued.
Importantly, S&P also said that it places additional emphasis on investment and liquidity risks when it comes to assessing casualty sidecars, considering the potential use of illiquid assets. The agency noted that evaluates how both risks are managed, especially under stressed conditions, as adverse investment performance could ultimately reduce the amount of collateral available to cover claims.
As Artemis’ readers are aware, the regulatory treatment of reinsurance sidecars varies by jurisdiction.
Typically, most P&C sidecars are established in Bermuda, but other jurisdictions like Cayman Islands have also been used as a domicile.
“In Bermuda, fully collateralized special-purpose insurers are generally exempt from traditional capital and solvency requirements. We understand that most P/C sidecars domiciled in Bermuda would typically be structured to meet these requirements,” S&P added.
“From a cedent’s perspective, regulators in most jurisdictions typically recognize sidecars as effective risk-transfer mechanisms. Accordingly, the regulatory requirements generally expect cedents to reflect any associated counterparty credit risk in their solvency calculations, where relevant.”
In terms of whether S&P assigns credit ratings to stand-alone P&C sidecars, the agency stated that it is generally challenging, given that these structures are typically set up as SPV’s and lack permanent capital. As a result, the agency saids that it does not usually view sidecars as traditional insurers with independent strategies and business plans.
Furthermore, S&P’s report also notes that within recent years, a number of new reinsurance syndicates have been launched through London Bridge 2 PCC, the Lloyd’s of London insurance and reinsurance market’s insurance-linked securities structure.
“These syndicates are capitalized by third-party investors through the London Bridge 2 platform and are typically aligned with a single sponsoring cedent to share a portion of its reinsurance program. However, a key distinction is that these sidecar-like syndicates benefit from the Lloyd’s chain of security, including the support of the Lloyd’s central fund, which serves as the ultimate counterparty for the cedent,” S&P noted.
“This feature differentiates the reinsurance syndicates from traditional sidecars by providing an additional layer of security on top of the collateral. In addition, the collateral may include instruments like letters of credit that are eligible as Funds at Lloyd’s–capital that backs Lloyd’s syndicates–and that may not feature in traditional sidecars’ collateral.”
Concluding: “From a credit rating perspective, we will continue to monitor the investment risks associated with these syndicates, although we expect the role of private credit to remain limited.”
Find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.
