The outstanding market for collateralized structures grew by more than $5 billion in capacity terms over the course of full-year 2025, with casualty and non-catastrophe vehicles a key driver of sidecar market expansion, Aon Securities has said.Growing third-party and insurance-linked securities (ILS) capital levels and increased investor appetite are helping reinsurance sidecar sponsors expand their vehicles, benefiting from increased capacity or limit, as well as enhanced efficiency through pricing.Importantly for investors and allocators, we’re told sidecar structures and terms have not changed dramatically over the last year or two, with most sidecars having much more favourably aligned terms these days, that better protect both sponsors and importantly the investors in the vehicles.Aon Securities has been tracking the expansion of the reinsurance sidecar market over recent years.

, representing around 70% expansion of this segment of the ILS market in just one year.That was a strong increase from Aon’s previous estimate that outstanding reinsurance sidecar capital had at the middle of 2024.Then, , consisting of a property sidecar market at $17.9 billion of invested capital and a casualty sidecar market at around $1.7 billion.

Now, in the latest Aon Reinsurance Solutions market report, the insurance-linked securities and investment banking focused Aon Securities team revealed that it estimates sidecar capital grew by more than $5 billion in 2025.Aon now expects that sidecar demand from investors will remain robust, presenting new opportunities for sponsors to leverage aligned, quota share reinsurance structures to partner with institutional capital.Commenting on sidecar activity and highlighting their continued expansion into other lines of business beyond property and catastrophe risks, Aon Securities explained, “Aligning with the theme of growth in the catastrophe bond market, sidecar capacity grew more than $5 billion in 2025, primarily driven by casualty and multiline sidecars which generate float for investors.

“With demand rising across the asset management spectrum for diversified insurance strategies, casualty portfolios are drawing particular interest from private credit managers, and multiline portfolios are attracting private equity investors with a desire to balance underwriting returns and alternative investment income.“This broadening of investor interest has also attracted new issuers with innovative structures to the market, including insurers, reinsurers and MGAs.” Going into more detail to say, “Specifically, insurers are diversifying their placement panels through the packaging of ceded reinsurance portfolios as ReShares.Reinsurers are discovering new sources of retrocession capital for specialty and casualty portfolios, and MGAs are placing whole account portfolios to increase capacity.

“In all cases, the Lloyd’s and Bermuda marketplaces have supported a variety of strategies and facilitated growth of the sidecar market through novel structures.“Across the board, sidecar capital has helped clients maintain growth, manage risk exposures, diversify their reinsurance sources, and generate enhanced commissions.” The resurgence of investor interest and activity levels in the reinsurance sidecar market has been dramatic in recent years.Invested capital in the sector has now roughly doubled since the middle of 2024 and currently shows no signs of slowing.

The resurgence happened after meaningful changes were made to sidecar terms and conditions, following losses experienced through the soft market and catastrophe heavy years of 2017 through 2020 (or so).Prior to that, reinsurance sidecar capacity had stood as high as $8.4 billion back in 2015, but reduced significantly through the period of losses, before rapidly recovering once more aligned terms were installed.As a result, the reinsurance sidecar provides a good example of how the market corrected mistakes made, tightened up structures and demonstrated the value of alignment with investors to sponsors, which stimulated growth in reinsurance sidecars and that has helped fuel the expansion into areas of non-cat and casualty as the market began to see their true potential as efficient ways to fund insurance and reinsurance businesses in a more direct manner, while gaining exposure to risk returns and in longer-tailed cases investment float as well.

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