The US Treasury has stepped into the debate over offshore life reinsurance, with Secretary Scott Bessent meeting state insurance regulators to discuss the industry's growing exposure to private credit, much of it routed through Bermuda.
The session with the National Association of Insurance Commissioners (NAIC) signals heightened attention from the Trump administration to the cross-border flow of US life and annuity liabilities into Bermuda's reinsurance market.
Bermuda's long-term reinsurance industry managed $1.52 trillion in assets as of September 2025, according to Bermuda Monetary Authority data. The Bermuda International Long-Term Insurers and Reinsurers association reports that more than 80% of the sector's ceded business originates in the US.
Many of the island's long-term reinsurers are owned by or affiliated with private-equity firms, raising questions over asset management practices and whether holdings are sufficiently liquid to meet a surge in policyholder withdrawals.
Recent BMA stress test data points to liquidity buffers well above regulatory floors. Under the authority's 1-in-200 stress scenario, the median Liquidity Coverage Ratio rose to 471% in 2024 from 418% the prior year, compared with the 105% regulatory minimum.
The BMA has flagged liquidity risk management as a 2026 supervisory priority and reviewed 76 Commercial Insurer's Solvency Self-Assessment filings. Apollo, KKR, Ares, Brookfield and Carlyle are among the private-equity firms active in the Bermuda market.
Domestic exposure is also under review. The NAIC reported last month that US insurers held $276.8 billion in collateralized loan obligations at year-end 2024, up roughly 2% from a year earlier and equivalent to about 5.1% of total bonds held.
In a statement after the meeting, the Treasury Department said Bessent emphasized the need for "fit-for-purpose regulation that encourages innovation while appropriately managing risk." Both sides agreed to continue engagement on risk-based capital, private letter ratings, offshore reinsurance jurisdictions, and the oversight of evolving business models.
Bessent told the regulators the administration backs the state-based regulatory framework and values their consumer protection work.
"Like all of you, my team at Treasury is monitoring the transformation of the US life insurance industry and trends in private credit," he said, adding that he looked forward to continued engagement on both markets.
NAIC president-elect Elizabeth Dwyer said the group welcomed the chance to outline how state regulators are using oversight tools and enhanced risk-mitigation frameworks to support stable markets.
Scrutiny has intensified globally. Regulators in the US, UK, Japan and the European Union have ramped up oversight as domestic life and annuity carriers offload pension and annuity blocks to Bermuda reinsurers in multibillion-dollar transactions.
Speaking at last month's BMA Forum, Petra Kielhema, chair of the European Insurance and Occupational Pensions Authority, told the industry to "be ready for more visibility."
She said insurers' growing involvement in alternative investments is drawing supervisory attention, and the sector will increasingly need to demonstrate that its activities remain controlled, prudent and aligned with consumer interests.
The exchange between Treasury and the NAIC suggests that reinsurance flows tied to Bermuda will remain a focal point as US regulators recalibrate oversight of the life sector.
