Bermuda drives the rise of ‘on-demand’ capital in reinsurance

Reinsurance capital strategy is entering a more modular phase, increasingly designing platforms that can pull in third-party capital quickly and deploy it against risk as needed.

That is according to Am Takhar, senior manager, advisory, at KPMG in Bermuda, sponsor of the Business Development Agency Risk Summit, held in Bermuda this week. He told Bermuda:Re+ILS that capital markets strategies in 2026 are “increasingly about speed, flexibility, and capital efficiency – using ‘on-demand’ third-party capital to scale peak exposures without permanently adding balance-sheet leverage.”

That framing suggests reinsurers are not simply raising more capital to write more risk, they are building capital access points that allow them to expand or contract risk capacity dynamically. In effect, the reinsurance balance sheet becomes a platform for attracting and deploying outside capital rather than the sole source of underwriting power.

The catastrophe bond market remains the clearest example of this model. “2025 was a record year for catastrophe bond issuance (first year above $20bn; widely reported at ~$25.6bn), reinforcing Bermuda’s role as a structuring, listing, and servicing hub for the asset class,” Takhar explained. 

The market is no longer defined solely by post-event capacity gaps or opportunistic issuance windows. Instead, “entering 2026, the market is also maturing: spreads have eased from peak levels, but the investor base and issuance ‘muscle memory’ built over the last few years is keeping pipelines active.”

With that, catastrophe bonds are beginning to look less like episodic risk transfer and more like infrastructure. Investors better understand the asset class, sponsors better understand the mechanics, and the market can now support more predictable capital flows.

That maturity is also enabling expansion into lines that historically sat outside the ILS playbook. Takhar said the “notable evolution is the expansion beyond peak cat,” with strategies “broadening to include casualty and other non-cat risks, as investors seek additional diversification and cedents look for alternative capacity in stressed or volatile lines.”

This shift comes with a learning curve. Casualty sidecars and non-cat structures remain relatively new territory for many investors, which is changing the nature of deal structuring and disclosure. “These are ‘newer’ risk-transfer structures for many investors (vs. the more established property-cat playbook), so we’re seeing more focus on data transparency, tighter terms, and governance around underwriting and claims development.”

The same capital logic is also reshaping the life reinsurance market — particularly in Bermuda, where asset-intensive reinsurance platforms have expanded rapidly. “On the life side, sidecars are also a key theme, particularly in Bermuda. Large life reinsurance groups are using sidecars to generate fee income and grow without tying up the same amount of long-duration capital,” Takhar said.

That model is attracting a different investor cohort. These structures are “often attracting private capital allocators (including PE-backed platforms and institutional partners) that want access to insurance ‘float’ and returns with defined risk-sharing.”

Taken together, these developments point to a structural evolution in how reinsurance capacity is assembled. What it suggests is a shift away from a model where underwriting scale depends primarily on permanent equity and toward one where reinsurers operate as capital orchestrators — structuring vehicles, managing risk portfolios, and deploying investor capital alongside their own.

From Bermuda’s perspective, the jurisdiction’s relevance lies precisely in enabling that architecture: a market where capital formation, risk structuring, and execution infrastructure intersect. As third-party capital becomes more modular and diversified, the platforms capable of mobilising it quickly and credibly will increasingly define the competitive landscape.

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