As consumers seek more guaranteed insurance and retirement products, insurers face the challenge of meeting these expectations while managing capital efficiently. This is further complicated by pressure from public investors to return capital, limiting the resources available to underwrite new risks.

To bridge this gap, insurers have increasingly turned to private capital and reinsurance solutions like AIR. AIR not only offers a reliable source of capital but also provides insurers with tools to manage long-term uncertainties, including market volatility, changing regulatory demands, and evolving policyholder behaviours.

Over the past five years, AIR activity has grown substantially, with both cross-border and domestic transactions playing a significant role. While cross-border AIR has expanded in absolute terms, its proportional growth has remained steady, reflecting balanced participation across jurisdictions.

Bermuda has established itself as a leading jurisdiction for AIR due to its strong regulatory framework and commitment to prudential oversight and the BMA plays a central role in ensuring that AIR activities within the jurisdiction operate safely and sustainably.

The BMA regularly implements forward-thinking measures to address the complexities of AIR. These include transaction approval processes, liquidity stress testing, and transparent disclosures, all designed to fortify the safety and soundness of Bermuda’s long-term reinsurers. Notably, Bermuda’s reinsurers maintain a median solvency ratio of 259 per cent, significantly exceeding the regulatory minimum, underscoring their financial resilience.

Additionally, Bermuda is recognised as a Solvency II-equivalent jurisdiction and a National Association of Insurance Commissioners (NAIC)-qualified and reciprocal jurisdiction. Regular internal and external assessments ensure that Bermuda’s regulatory regime evolves to meet global standards, reinforcing its credibility in the global reinsurance market.

Despite AIR accounting for 5.3 per cent of global life insurance provisions—with Bermuda holding a modest 1.8 per cent share—the jurisdiction plays an outsized role in setting industry benchmarks. Bermuda’s reinsurers have demonstrated remarkable resilience through challenges such as the Covid-19 pandemic, market volatility, and unprecedented interest rate changes. Operating primarily on a collateralised basis and maintaining high-quality investment portfolios, Bermuda-based AIR reinsurers are seen as risk absorbers rather than risk transmitters.

The BMA’s proactive approach, enhanced by supervisory colleges, bilateral engagements, and educational white papers, ensures transparency and governance across all AIR activities. This not only protects policyholders but also promotes confidence among global stakeholders.

Bermuda’s established ecosystem, supported by its robust regulatory framework and forward-looking oversight, positions it as a key player in the evolution of AIR. Insurers and reinsurers operating in Bermuda benefit from a stable, transparent, and well-governed environment, ensuring they can meet the growing demands of AII while addressing long-term uncertainties.

BMA’s official document can be found here.