Bermuda continues to lead offshore life/annuity reinsurance: AM Best

With over 40% of total ceded reserves for US life-annuity writers in 2024, Bermuda continues to be a “driving force” in offshore reinsurance, according to a recent report by AM Best.

The report, titled “Bermuda Remains the Largest Offshore Life/Annuity Reinsurance Domicile,” further notes that Bermuda was involved in over 60% of ceded reserves for life/annuity transactions effective in both 2023 and 2024.

While growth in ceded reserves from US life/annuity insurers slowed to 6.4% in 2024, it still follows more than 10% growth in each of the three years prior, analysts noted.

“Bermuda has a long history of reinsurance regulator accessibility, along with solid networks of legal, actuarial and accounting expertise,” said Jason Hopper, associate director, AM Best. “Capital efficiency tends to be cited as the primary business rationale for using offshore reinsurance.”

The strong annuity growth over the past two years was driven by higher interest rates and an ageing population in the US, the report stated.

Although growth slowed in 2024, it is projected to persist, potentially leading more companies to seek reinsurers for managing growth and capital.

Affiliated offshore reinsurance can provide country-risk diversification and capital efficiency, which supports balance sheet growth. Yet it can also provide accounting and tax benefits, the report noted.

Jacob Conner, associate analyst, AM Best, said: “However, cross-border reinsurance introduces operational complexity and opaqueness, which may complicate analysis.”

According to the report, nearly 70% of reserves ceded offshore go to affiliated companies, with the firms backed by asset managers or private equity sponsors making up 46% of these offshore affiliate reserves.

The report also includes data on US life/annuity insurers, including the highest share of in-force ceded reserves held by offshore affiliates, a breakdown of in-force reserves assumed by region and a ranking of the largest reinsurance transactions for ceded reserves in 2024.

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