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US Insurers Cede More Risk Offshore Than Domestically
25 Apr
Summary
- Offshore reinsurance deals surpassed domestic ones for US life insurers last year.
- Deals with offshore entities covered $1.06 trillion in reserves in 2025.
- Bermuda and the Cayman Islands are key offshore reinsurance hubs for US firms.
US life insurers have significantly increased their reliance on offshore reinsurance hubs, surpassing domestic options for the first time. As of the end of 2025, reinsurance deals with offshore entities covered $1.06 trillion in reserves, representing nearly 52% of the industry's total use of this risk management tool.
This growing trend of transferring risk abroad, particularly to jurisdictions like Bermuda and the Cayman Islands, has sparked concerns. Critics worry that looser regulations in these offshore hubs could introduce systemic risk into the life insurance sector, impacting financial security for retirees.
Bermuda alone accounted for 40.5% of the reinsurance capacity used by US life insurers last year. This offshore shift allows insurers to free up capital for expansion, even as regulatory scrutiny is increasing in some of these key locations.
