In the second article of a four-part series, the Insurance sector within the Financial Services Industry Group explores how reinsurance sidecars are delivering historic returns.

While traditional investments struggle with single-digit returns, reinsurance sidecars are delivering up to 30%+¹ returns to institutional investors. This market surged by 40%² in 2024 to reach $10 billion, as investors discovered they can collect insurance premiums with limited downside and 1-5 year exit wind. Four forces created this perfect storm:

1. Hard market
2. Investor demand
3. Regulatory capital relief
4. Technology advancements

When establishing a reinsurance sidecar, several considerations must be addressed to ensure its effectiveness and alignment with strategic goals:

1. Risk coverage
2. Investment strategy
3. Risk transfer pricing
4. Domicile
5. Control

Elevated rates, uncorrelated returns, and clear exit timelines make this a compelling alternative to volatile traditional investments. Will you capitalize before the market becomes crowded?

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1 Artemis.bm, “Sidecar investors ‘handsomely rewarded’ for commitment in 2023: Aon,” January 5, 2024; https://www.artemis.bm/news/reinsurance-sidecar-market-estimated-at-record-10bn-in-2024-aon-securities/ 
2 Artemis.bm, “Reinsurance sidecar market estimated at record $10bn in 2024: Aon Securities,” September 9, 2024; https://www.artemis.bm/news/sidecar-investors-handsomely-rewarded-for-commitment-in-2023-aon/ 

Read the first article in this series, The $432B Boom is Just the Beginning: Why Margin Strategy Will Determine the Winners in Annuity's Golden Age