The Cayman Islands’ small share of the offshore reinsurance market edged higher in 2025 amid increased use of reinsurance by US life and annuity insurers.
Cayman’s share of in-force reserves assumed by offshore reinsurers rose to 2.3% in 2025 from 2% in 2024, according to a 19 August report from AM Best.
Bermuda remained the dominant offshore domicile, accounting for 39.9% of reserves.
AM Best said Cayman’s increase was driven largely by a small number of recently established sidecars. Bermuda’s share fell slightly from 40.9% in 2024.
The Cayman figures form part of a wider increase in offshore reinsurance among US life and annuity insurers.
More than 56% of ceded annuity reserves, including modified coinsurance reserves, were placed with offshore reinsurers in 2025, AM Best said.
The report said offshore reinsurance has become part of the competitive landscape for US insurers, particularly large companies involved in the pension risk transfer market.
Offshore domiciles can give insurers greater flexibility in how reserves are calculated. AM Best said they may allow discount rates based on actual portfolio yields and a broader range of assets to back reserves.
The wider reinsurance market also saw a change in the balance between affiliated and unaffiliated transactions in 2025. Unaffiliated transactions outpaced affiliated deals for the first time in three years.
The 10 largest unaffiliated reinsurance transactions involved more than US$107 billion in ceded reserves in 2025, compared with $35bn across the 10 largest transactions in 2024. Four of the 2025 transactions also involved sidecars.
AM Best identified collateral monitoring, enterprise risk management and counterparty diversification as key risks for insurers using offshore reinsurance.
The report also noted that Actuarial Guideline 55 took effect on 31 December 2025. The guideline brings asset-intensive reinsurance within the scope of asset adequacy testing.
Cayman’s role in the market comes as it pursues Qualified Jurisdiction Status from the National Association of Insurance Commissioners.
The designation would allow US insurers to receive credit for reinsurance from non-US-domiciled companies while reducing collateral requirements, according to the report.
