U.S. life insurers have transferred nearly $800 billion in reserves to offshore affiliates between 2019 and 2024, a trend tied to the industry’s growing involvement in private credit markets, according to a new report by Moody’s Ratings.
The movement of funds—primarily to jurisdictions like Bermuda and the Cayman Islands—reflects a broader shift in how life insurers manage risk and pursue returns. Moody’s attributes this change to the low interest rate environment during the past decade, which drove insurers to seek higher-yielding investments through private equity partnerships and alternative asset strategies.
During this period, life insurers engaged in approximately $75 billion in M&A activity with private equity firms. Notable transactions include Allstate’s 2021 sale of its life and annuity business to Blackstone-managed entities and Brookfield Reinsurance’s 2022 acquisition of American National.
While offshore arrangements offer capital relief and operational flexibility, analysts warn that the trend raises regulatory and transparency concerns. Offshore affiliates often operate under looser regulations, potentially limiting oversight over the quality and risk of underlying assets.
Moody’s notes that the integration of private credit and alternative asset management into traditional insurance has become widespread, altering the financial structure of many U.S. insurers.
Regulatory bodies, including the National Association of Insurance Commissioners (NAIC), have expressed concern over the long-term implications of such offshore transfers, especially in the event of financial stress or market downturns.
