The life & annuity sidecar market in Bermuda has grown almost four-fold to approximately $375bn in the past four years, according to Bermuda’s Life & Annuity Sidecar Market Quadrupled as Insurance and Private Credit Converge, a recent report from ratings agency Morningstar DBRS.
The report says that the trend reflects “the wider convergence between insurers, fund managers, and institutional investors, as insurance liabilities increasingly serve as a source of capital for private-market investment strategies.”
Indeed, many of the larger, brand-name alternative asset managers are now present in the market, and for good reason: sidecars can provide access to alternative asset capabilities like private credit and infrastructure for sponsoring carriers, and asset managers can deploy these large sums of capital into their own investment products, which has the added bonus of delivering recurring management fees. And it’s not only North American asset managers that are participating; the report says that Japanese life insurers are also in the space, due to by domestic regulatory capital changes.
The report says, however, that only a few sidecars publicly disclose their investment allocations, making it difficult to get an idea of the extent to which private assets form part of the sidecar’s investment strategy.
“This growth of life and annuity sidecars is fuelled by the incorporation of new sidecars and expansion of existing ones, a trend that is likely to persist. Several sidecars have partnerships with private credit-focused asset managers, suggesting that there is exposure to the asset class but not revealing the amount invested,” said Renee Gao, Vice President, Global Insurance & Pension Ratings at Morningstar DBRS.
While Bermuda remains the dominant hub, the report also refers to the Cayman Islands, which in recent years has seen the launch of Malibu Life Re and Fort Greene Re in 2024 and 2025, respectively.
Notably, the territory applied for Qualified Jurisdiction Status with the NAIC last month, and while the application could take a year or more, if approved, reasons exist that could mean that Cayman takes some share from Bermuda.
Sidecars aren’t the only mechanism through which the capital markets and life/annuity carriers are teaming up, however: The report also suggests that part of the overall growth at the nexus of the insurance and private markets spaces can be attributed to rated feeder funds, financing structures that provide insurers with rated debt exposure directly to private market funds (which satisfies the carrier’s desire (and requirement, in some cases) for investments that provide an acceptable return whilst retaining any regulatory capital benefits).
Whilst Morningstar DBRS emphasises that neither sidecars nor rated feeder funds eliminate the underlying credit, liquidity, or investment risks, it expects interest in these structures to be healthy going forward.
“Demand for rated feeder fund debt remains solid as the product becomes more mainstream. We expect to see more horizontally distributed feeder funds, further driving the convergence between fund finance and structured products,” said Manna Cheung, Vice President, US Structured Credit Ratings – Funds at Morningstar DBRS.
Regardless of structure/vehicle or domicile, the convergence of the life insurance and private capital markets seems set to continue to grow. In its report, Morningstar DBRS cites PitchBook data that suggests that the seven largest publicly traded alternative asset managers held approximately $1.4trn of insurance assets between them in 2025, a number that is expected to jump by more than 50% to $2.2trn by the end of the decade.
