Offshore reinsurance and Bermuda: why it matters to policyholders

Many U.S. life insurers pass part of their policies' risk, and the assets backing it, to reinsurers based in Bermuda and other offshore jurisdictions. Bermuda has its own solvency regime and regulator, and U.S. regulators generally accept it. But some of those reinsurers are affiliated with the ceding insurer or its private-equity owner, and U.S. and international officials worry that the arrangement can be harder to see and may rest on thinner capital than a U.S. company would hold. For most policyholders nothing changes day to day; the question is how well-protected the promise is.

How a Bermuda reinsurance deal works

Reinsurance is insurance for insurers. When a U.S. company cedes a block of policies or annuities to a reinsurer, it sends over premiums and the associated assets, and the reinsurer takes on the obligation to pay claims. Your contract is still with the original insurer, which stays legally responsible to you. If the reinsurer cannot pay, the original company is still on the hook.

Offshore reinsurance took off for two reasons:

• Reserve rules. Beginning in 2000, term life and universal life with secondary guarantees were subject to formula reserve requirements that many insurers considered higher than the likely cost of claims. Moving the business to a reinsurer in a jurisdiction with different reserve and capital rules reduced the capital the U.S. company had to tie up. Later reforms, including principle-based reserving and what it means for prices, were meant to bring U.S. requirements closer to the real risk.
• Asset-intensive deals. Annuity and long-term-care writers cede large blocks, including the investments behind them, to reinsurers that can hold riskier assets and use Bermuda's capital rules. Several firms profiled here use Bermuda affiliates: Kuvare set up Kuvare Life Re in Bermuda in 2016, Resolution Life Group Holdings is a Bermuda company (Resolution Life), Talcott Financial Group sits under a Bermuda parent, and Global Atlantic began as a Bermuda company. Wilton Re owns a Bermuda reinsurer and announced in 2026 a U.S.- and Bermuda-domiciled partner, Windsor Life Re.

The scale

Bermuda's long-term reinsurance sector managed about $1.52 trillion in assets as of September 2025, with more than 80% of the ceded business coming from the United States, according to Insurance Business. A Bank for International Settlements paper from September 2024 said major U.S. life insurers had ceded about $2.1 trillion of reserves at the end of 2023, up from roughly $500 billion in 2017, and that about 40% was assumed by reinsurers in offshore centers, almost triple the 2017 share.

The concerns

• Transparency and regulatory gaps. The International Monetary Fund's December 2023 note said offshore reinsurers owned by private-equity firms can take advantage of regulatory arbitrage at the cost of reduced transparency, limiting regulators' ability to monitor them.
• Capital differences. The Financial Stability Oversight Council has warned that reliance on offshore reinsurers with more lenient capital requirements could undermine insurers' stability. The Federal Reserve's Financial Stability Reports separately track insurers' growing exposure to riskier, less liquid assets.
• Affiliate dealing. When the reinsurer belongs to the same group as the ceding insurer, the group effectively decides how much risk to keep and which assets to hold.
• Liquidity. Officials ask whether holdings can be sold quickly if many policyholders withdraw at once, a particular question for annuities.

What the other side says

Bermuda officials and the industry point to the island's regulatory system, run by the Bermuda Monetary Authority (BMA). The NAIC listed Bermuda as a Qualified Jurisdiction in 2015, recognizing that its regime achieves outcomes similar to the U.S. system, and the BMA and NAIC have held regular regulatory dialogues since a 2015 memorandum of understanding. Insurance Business reported that the BMA named liquidity risk management a 2026 supervisory priority and that its stress tests showed a median liquidity coverage ratio of 471% in 2024 against a 105% minimum. Reinsurers also argue they bring capacity that lowers annuity costs for customers.

What U.S. regulators have done

• In August 2025 the NAIC adopted Actuarial Guideline 55, which requires insurers that cede asset-intensive business to offshore reinsurers to test whether the assets stay adequate under moderately adverse conditions. First reports were due April 1, 2026, and the NAIC is expected to review the results before deciding whether tougher rules are needed.
• Through its Macroprudential Working Group, the NAIC has made cross-border reinsurance one of 13 considerations for monitoring private-equity-owned insurers.
• Treasury Secretary Scott Bessent met with the NAIC to discuss offshore life reinsurance and private credit, according to Insurance Business, and both sides agreed to keep talking.

What you can check

1. On your annual statement or policy documents, find the legal insurer name (see how to read a life insurance policy, section by section).
2. Read the insurer's AM Best, S&P, Moody's and Fitch ratings explained; AM Best and others discuss affiliated reinsurance in their reports.
3. Ask whether a block that includes your policy has been reinsured, and with whom. The insurer's website or annual filings often describe large transactions.
4. Know that guaranty association coverage rests on your insurer's state of domicile, with limits that vary by state; see state life and health guaranty associations and state guaranty association coverage lookup.
5. Remember that traditional term and whole life contracts carry guarantees that apply whatever the reinsurance structure.

Key takeaways

• Reinsurance, including offshore, is normal and often useful; your contract stays with the original insurer, which remains responsible to you.
• Concerns from the Fed, FSOC, IMF, BIS and NAIC center on affiliated reinsurers, thinner capital rules, less transparency and illiquid assets.
• Bermuda's regulator and the industry say the regime is robust, and U.S. regulators have begun requiring added testing under Actuarial Guideline 55.
• Check the legal insurer, its ratings and your state's guaranty limits rather than reacting to the word "offshore."