Alternative capital spurs reinsurance growth: Panel

HAMILTON, Bermuda — Alternative capital from insurance-linked securities and capital markets is fueling growth in the reinsurance sector, experts said Wednesday at the 2025 Bermuda Captive Conference.

Alternative capital structures, such as sidecars, have been around for decades but have gained more attention in recent years, Christian Dunleavy, group president and CEO of Aspen Bermuda Ltd., said during a panel session.

Most third-party capital that has entered the market through ILS structures has focused on property catastrophe reinsurance, Mr. Dunleavy said.

Since 2020, Aspen has shifted its strategy to expand its use of alternative capital to non-catastrophe and non-reinsurance classes such as casualty, cyber and financial products, including directors and officers liability insurance, he said.

Now, only about 20% of the $2.2 billion in third-party capital that Aspen manages supports catastrophe risks, while 80% backs long-tail products — of which 55% is in insurance rather than reinsurance, Mr. Dunleavy said.

“That’s been a pretty rapid evolution of our strategy. We have been an early mover on that,” he said.

Bermuda offers the ability to discuss these structures with the Bermuda Monetary Authority and work through them quickly and efficiently, he said.

The insurance-linked securities market includes sidecars, alternative structures and catastrophe bonds, said Brent Slade, head of insurance-linked securities at Canopius Reinsurance Ltd.

“The goal, whether it’s ILS or reinsurance, is to match risk liabilities to capital and try to do it in the most efficient manner, and bring those two partners together in a financial tender and try to find the best partners,” Mr. Slade said.

ILS has evolved from property catastrophe risks to include more casualty insurance and reinsurance, he said.

“Large credit, direct lending investors, some of the largest credit shops in the world, are now seeing the value in setting up structures, predominantly in Bermuda,” he said.

Collateralized structures allow them to earn higher yields and produce a net overall return that’s attractive to their investor base while supporting insurers, he said.

More than $50 billion in capital has flowed into life insurance and reinsurance in Bermuda, said Neha Aroa, CEO of Athora Life Re Ltd.

That kind of capital comes from sovereign wealth funds, pension funds and institutional investors, Ms. Aroa said.

In many ways, that is the right kind of capital to support a business with long-duration liabilities of 10 to 30 years, she said: “This capital is here to stay.”