One-Third of Global Annuity Reinsurance Is Third-Party Capital
Third-party capital now accounts for approximately one-third of global life annuity reinsurance capacity, according to a new estimate from reinsurance broker Guy Carpenter. The rating agency AM Best reported this figure, noting that third-party investor sources have doubled in size since 2022. This shift represents a significant expansion of alternative funding mechanisms within the life and annuity reinsurance sector.
Growth in offshore platforms
The life and annuity reinsurance market has seen a structural transformation over recent years. Underwriting groups have increasingly relied on efficient third-party capital mechanisms, including a proliferation of reinsurance sidecar structures and sidecar-like reinsurers. These arrangements allow for the support of major operations without the heavy capital requirements of traditional underwriting. Offshore life and annuity reinsurance has averaged 31% annual growth over the past decade, a rate far exceeding the typical 4% expansion seen in the pure life reinsurance market.
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Bermuda and the Cayman Islands have become particularly prominent for these platforms. Ceding companies utilize them as tools for both reinsurance and capital management. AM Best attributes this growth to a combination of factors, including a stable economic environment, favorable regulatory settings, political stability, and access to specialized legal and financial talent.
Sidecars have also gained prominence in the life and annuity space. Lou Silvers, a senior financial analyst at AM Best, explained that these are reinsurance affiliated or non-affiliated entities that draw capital from third-party limited investors. They provide incremental just-in-time capital to execute larger deals when opportunities arise, earning additional fees for the general partner in the process.
New capital continues to enter the global life and annuity reinsurance market. Wilton Re recently partnered with Sun Life to launch Windsor Life Re, a U.S. and Bermuda-based company designed as a life and annuity reinsurance sidecar. The entity is expected to deploy around US $900 million in capital. Similarly, Talcott Financial Group established the West Grove Re Ltd. sidecar in Bermuda, capitalizing it with approximately $1 billion following a fundraising effort with Goldman Sachs.
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Other recent examples include F&G launching Fort Green Reinsurance with Blackstone in August 2025, and Fortitude Re partnering with Carlyle to launch the Fortitude Carlyle Asia Reinsurance Ltd. (FCA Re) sidecar in October 2025. These launches illustrate the rapid pace of adoption for growth-driving strategies in a market where scale and access to capital are critical factors.
While most structures act as a companion source of underwriting capital, questions have occasionally been raised regarding the more circular nature of some third-party capital structures sponsored by private equity and credit investment specialists. In these cases, investor funds support the expansion of underwriting to generate more float, which then fuels the private credit strategies operated under the same group. Despite these differing motivations, the strategy appears destined to become an increasingly important part of the sector.
