A new report from Fitch Ratings has suggested that M&A activity among European insurers is likely to accelerate in 2026, as softer pricing and stable interest rates constrain organic growth and limit margin expansion.
The rating agency said acquisitions could enhance business profiles through greater diversification and stronger competitive positioning.
However, these benefits may be tempered by execution and integration risks, as well as higher leverage and weaker fixed-charge coverage where transactions are debt-funded.
Even so, Fitch believes dealmaking could help support revenue and earnings growth at a time when the sector is grappling with softer pricing in non-life lines, subdued economic growth and stabilising investment yields.
“Transactions may also increase scale in core markets, improve diversification and cost-efficiency or facilitate the acquisition of new technology,” the rating agency added.
Fitch noted that potential targets in specialty and reinsurance markets can provide differentiated underwriting capabilities and diversification benefits, as well as access to Lloyd’s of London.
“We view these factors as drivers for Zurich’s possible acquisition of Beazley, as well as American International Group’s acquisition of Convex and the Radian–Inigo transaction in 2025,” Fitch explained.
Elsewhere in the report, Fitch observed that many European insurers report Solvency II (S2) ratios above their target ranges, and that forthcoming EU S2 reforms could further increase those ratios by an average of 5–7 percentage points, and by as much as 20 percentage points for some groups, when they come into effect on 1 January 2027.
“This provides strong capital capacity to finance acquisitions, reducing risks of negative rating action from M&A. Rated insurers generally have some leeway to issue new debt without breaching Fitch’s criteria guidelines for financial leverage and fixed-charge coverage ratios at their current rating levels,” the rating agency said.
Fitch also stated that it expects acquirers in the UK life segment, including private capital firms looking for long-duration liabilities, will continue to seek access to the pension risk transfer (PRT) market.
“Partnerships between European life insurers and large, mainly US, alternative investment managers should also continue. However, UK and EU regulators are monitoring risks of misalignment of policyholder and shareholder interests, and those linked to asset-intensive reinsurance,” the firm added.
Fitch’s report continued, “We also expect PRT transactions to accelerate in the Netherlands as the country switches from defined-benefit pensions to defined contributions, which should complete by 2028. We expect NN Group, Athora, Achmea and ASR Nederland to be among the most active consolidators.
“The German life segment remains conducive to back-book consolidation, with incumbents such as Viridium, Frankfurter Leben and Athora best-positioned for further transactions. In Germany, as in the Netherlands, we believe there is limited scope for new consolidators to enter the market.
“In markets such as France or Belgium where bancassurance is prevalent, we expect banks to continue their interest in owning or increasing the scale of their insurance subsidiaries, given favourable regulatory treatment under the Danish Compromise.
“However, the European Banking Authority clarified in January 2026 that EU rules do not allow banks to extend Danish Compromise capital relief to asset managers owned through insurance subsidiaries.
Some large composite insurers and reinsurers are also considering bolt-on acquisitions that add capabilities or distribution in existing or new markets. For instance, Munich Re, Allianz and Generali have indicated willingness to pursue further M&A.”
