The outstanding market for collateralized reinsurance sidecar structures has expanded rapidly, with estimates from rating agency AM Best valuing the space between $16 billion and $18 billion, which marks an 183% increase over the mid-point of the $5 billion to $7 billion range estimated by the agency in 2023.
“The sidecar segment of the ILS market expanded materially in the past couple of years. The sidecar market is USD 16 billion to USD 18 billion in size, up from USD 5 billion to USD 7 billion in 2023, with most of the growth coming from property catastrophe coverage,” the report reads.
Aon had previously estimated that by the end of Q3 2025, property reinsurance sidecars had reached $17.9 billion of invested capital, while the relatively newer casualty reinsurance sidecar segment had reached $1.7 billion.
AM Best outlines that there are several primary factors that have fueled the growth in property catastrophe sidecars.
Firstly, the agency notes that investors have had a strong appetite for the proportional quota-share risk exposure that’s offered by sidecars, with stronger underlying premium rates and improved underwriting margins being the key drivers of investor appetite.
As well as this, the agency also stresses that cedents value the sidecar capacity as part of their overall capital management approach.
Beyond property catastrophe risk, sidecars have also meaningfully expanded into casualty risk exposure throughout the last couple of years, as the casualty ILS market continues to expand and grow further.
“Casualty lines have remained under heightened scrutiny across the reinsurance segment following adverse loss development and ongoing concerns around social inflation, litigation trends, and a changing legal environment,” AM Best said.
Adding: “Despite these challenges, certain capital market participants continue to view casualty risk as attractive, drawn by the appeal of insurance float and the opportunity to deploy capacity through ILS structures. In response, the casualty ILS segment has introduced innovative solutions, notably casualty sidecars.”
Last year, we saw a number of key Bermuda reinsurers launch casualty reinsurance sidecars.
In July, Ascot Group and Antares Capital partnered together to set up Wayfare Re, a $500 million sidecar for Ascot’s casualty book.
Then in August, Enstar, one of the largest legacy and run-off reinsurance specialists across the globe, launched its first direct third-party capital play, a $300 million casualty reinsurance sidecar named Scaur Hill Re Ltd.
Momentum also continued in the early weeks of 2026, as QBE Re, the international reinsurance arm of the global insurance group, managed to successfully sponsor its first casualty reinsurance sidecar vehicle, securing over $550 million in fully collateralised quota share reinsurance through George Street Re.
“The long tail duration and risk-sharing structure of casualty sidecars offer investors an opportunity to achieve diversified return profiles while also enabling reinsurers to expand capacity on favorable cession terms alongside traditional market coverage,” AM Best added.
Find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.
