The Bermuda insurance and reinsurance market

Bermuda is the world's leading offshore center for property catastrophe reinsurance, insurance-linked securities and large corporate captives. The island offers deep pools of capital, a regulator the European Union and the NAIC both recognize, and a body of lawyers, actuaries and managers who service the market. For a U.S. business, Bermuda matters mostly in the background: it is where much of the capital that supports your carrier's catastrophe cover sits.

What Bermuda does

The market has four main functions:

• Commercial reinsurers. Large Bermuda-based companies write property catastrophe, casualty and specialty reinsurance for insurers worldwide, including most major U.S. carriers. Well-known names include Arch Capital, RenaissanceRe, Everest, AXIS and Fidelis. See the world's largest reinsurers: 2026 rankings and what they mean.
• Insurance-linked securities (ILS). Bermuda is the home of most catastrophe bond vehicles, sidecars and collateralized reinsurers. The Bermuda Monetary Authority (BMA) reported that 209 new ILS were added to the Bermuda Stock Exchange in 2025, up from 156 in 2024. Mechanics are in Catastrophe bonds and ILS: how they work and who they affect and Sidecars, collateralized reinsurance and ILS funds explained.
• Captives. Many corporations, including U.S. companies, use Bermuda captives to retain risk or access reinsurance directly. U.S. domiciles such as Vermont compete for the same business. See Captive domiciles compared: Vermont, Utah, Delaware and offshore.
• Excess liability and specialty. The "Bermuda Form" is a well-known excess liability policy form used by large corporations and written by Bermuda-based insurers, with disputes settled by arbitration in London under English law. It matters mainly for big companies with multinational liability programs.

Size and regulation

According to the BMA's 2025 annual report statement, the Bermuda insurance sector had total assets of $2.17 trillion at year-end 2024, gross premiums written of $362 billion and total capital and surplus of $447 billion. These numbers include life and annuity business, which dominates the asset totals, so they overstate Bermuda's property-casualty weight. The BMA recorded 1,210 registered insurers at December 31, 2025 (down from 1,239 the year before), with 56 added in 2025.

Regulation is risk-based and tiered by insurer class. The classes range from Class 1 to 3 for smaller and captive insurers, through Class 3A and 3B, up to Class 4 for the largest commercial reinsurers and Classes C, D and E for long-term insurers. Higher classes face enhanced capital requirements and a Bermuda Solvency Capital Requirement model that can use an approved internal model.

International standing matters to U.S. cedants. According to the BMA, Bermuda is one of seven jurisdictions with NAIC "qualified jurisdiction" status, one of three with NAIC "reciprocal jurisdiction" status, and one of two with full Solvency II equivalence from the European Union. Reciprocal status lets a qualifying Bermuda reinsurer assume U.S. business without posting full collateral, subject to the conditions in state credit-for-reinsurance laws. Before that, reinsurers not licensed in a U.S. state had to post collateral to give the cedant balance-sheet credit.

Tax: the 15% corporate income tax

Bermuda enacted a Corporate Income Tax Act in December 2023, taking effect for fiscal years starting on or after January 1, 2025. It applies a 15% tax to Bermuda entities that belong to multinational groups with annual revenue of EUR 750 million or more, mirroring the OECD's Pillar Two minimum tax. Transition measures, including an economic transition adjustment and deferred tax assets, let large groups reduce the tax over about a decade. S&P Global Ratings said the tax was unlikely to remove Bermuda's hub status. Smaller groups and standalone captives are outside the scope.

U.S. tax rules still apply on the U.S. side. A U.S. insurer that cedes casualty premium to a foreign reinsurer owes the 4% federal excise tax on direct premium and 1% on reinsurance premium under section 4371, though credit and treaty rules can change the result. For Bermuda captives owned by U.S. companies, the tax treatment turns on whether the captive elects to be taxed as a U.S. company. See how captives are taxed: premiums, 831(b), excise tax and distributions.

How Bermuda reaches a U.S. business

Because capital moves quickly, the Bermuda market is often where pricing changes first. The January 1, 2026 declines in property catastrophe rates followed record capital and strong ILS issuance, and the sector's strength through 2025 was part of that story. See The January 1 reinsurance renewals explained: the 2026 results and how reinsurance pricing flows into business insurance premiums.

Bermuda compared with Lloyd's and U.S. alternatives

• Lloyd's is a marketplace of syndicates with a shared Chain of Security and a specialist, subscription-based approach. Bermuda is a collection of individual companies and funds. See How Lloyd's of London works: syndicates, brokers and what it means for you.
• U.S. domiciles such as Vermont, Delaware and Utah dominate onshore captives. Bermuda tends to attract larger and multinational programs and reinsurance companies.
• Other hubs such as the Cayman Islands (captives), Guernsey, Dublin, Zurich and Singapore compete on different segments.

What a U.S. buyer should ask

1. Is any part of my program with a non-admitted or offshore insurer? If so, state surplus lines rules and disclosures apply, and state guaranty funds generally do not.
2. Who is the insurer of record, and how is it rated? Check AM Best or S&P for the specific entity, not the parent group.
3. Does the policy include arbitration or choice-of-law outside the U.S.? The Bermuda Form is the main case; see your counsel.
4. For a captive, who is the fronting carrier and what collateral is required? See fronting arrangements and fronting carriers: how they work.
5. Is the program exposed to the collateral and tax rules of the offshore domicile?

A hypothetical

Say a Florida regional carrier buys $300 million of catastrophe excess-of-loss cover each June 1. A third of it is written by Bermuda reinsurers, another third by Lloyd's and European reinsurers, and the rest through a catastrophe bond issued through a Bermuda vehicle. If Bermuda capital grows, the carrier's reinsurance cost falls, and its commercial property rate filing may reflect that. The Florida business owner never contracts with a Bermuda company but benefits, or suffers, when that capital enters or leaves. That is why Bermuda matters even to a business that has never heard of it.

Key takeaways

• Bermuda is the leading offshore hub for property cat reinsurance, ILS and large captives, regulated by the BMA with NAIC reciprocal and EU Solvency II equivalence status.
• The BMA reported 1,210 registered insurers at the end of 2025 and 209 new ILS listed in 2025.
• A 15% corporate income tax applies from 2025 to Bermuda entities in multinational groups with EUR 750 million or more of revenue.
• Business buyers feel Bermuda through carrier capacity and reinsurance pricing more than through direct contracts.
• Direct Bermuda policies, such as excess or Bermuda Form coverage, are surplus lines and usually lack guaranty fund protection.