Some 67% of insurers and reinsurers surveyed by investment giant BlackRock said they intend to utilise reinsurance sidecars over the coming year, while 54% expect to increase their use of third-party capital sources, underscoring the continued push to more efficient management of capital in the sector.The finding’s also reflect the increasing trend for insurance and reinsurance carriers to look to third-party capital partnerships as a way to bring in additional capital to fuel growth while earning fees, by leveraging expansive investor appetite for direct exposure to insurance-linked returns.The day’s of sidecars and insurance-linked securities (ILS) structures being solely about sourcing efficient reinsurance or retrocessional protection are long gone.Now, it’s more of a strategic move to lever-up and smooth out the earnings potential of the traditional re/insurance business model with the help of third-party investors, while also funding expansion at the same time.

BlackRock’s 14th annual Global Insurance Report saw the firm surveying 463 senior investment professionals from insurance and reinsurance companies across 33 markets, who together represent $23 trillion in assets under management.The wide-ranging report highlights that the re/insurance sector is bracing itself for another year of uncertainty, with inflation cited as the top risk concern, but the sector is also adapting with caution while seizing opportunities, BlackRock explained.On the investments side, which is the main focus of BlackRock’s annual survey and report, re/insurers are increasingly allocating to private market assets.

Even as risk appetite remains low and most foresee a relatively stable overall level of investment portfolio risk, almost one-third of re/insurers surveyed expect to increase private market allocations.“The story of 2025 is one of caution amid volatility, but also of conviction in the long-term opportunities private markets can offer,” explained Mark Erickson, Global Insurance Strategist of BlackRock’s Financial Institutions Group.“Insurers are navigating the environment with discipline while many are embracing new operating models, such as hybrid solutions to access private assets, and adopting investment, risk, and AI software to strengthen their portfolios.” Operating models are being adjusted as re/insurers look to position for long-term competitiveness.

Use of private capital in deployment to investment opportunities is growing, but so too is partnership with private capital to support strategic ambitions and fund growth.This is where the expanding use of third-party reinsurance capital structures comes in, something picked up by BlackRock’s survey this year.“We’ve observed a growing emphasis on capital management across all types of insurers,” BlackRock explains.

Adding from the finding’s of its survey, “Over the next 12 months, 67% anticipate utilizing reinsurance sidecars, 54% expect to increase their use of third-party capital, and 53% plan to expand their captive management capabilities.” That speaks to the increased volumes of reinsurance sidecars and similar partnership deals being seen in the market in 2025, as well as their broadening scope into lines of business beyond property catastrophe risk, with casualty and life sidecars a particular area of expansion.Recall that, , representing around 70% expansion of this ILS market segment in just one year.BlackRock went on to explain the motivations, “This heightened focus on capital management is largely driven by insurers’ need to diversify balance sheet income through greater fee-based revenue, optimize balance sheets and capital structures, differentiate asset mixes via sidecars, and access non-dilutive sources of capital.” BlackRock sees capital management emerging as a strategic toolkit among insurers and reinsurers, with an increasing array of structures and mechanisms for utilising capital from alternative sources.

At its heart, these trends help re/insurers make their own balance-sheet capital work harder and more efficiently for them, through the use of third-party capital partnerships and using techniques from the ILS and capital market..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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