Aon, the global professional services firm specialising in risk, retirement and health solutions, says insurers are broadening the way they approach mergers and acquisitions as economic conditions and higher capital costs make large-scale acquisitions more difficult to justify.
According to Aon, businesses are increasingly considering hybrid growth structures that sit between full acquisitions and organic expansion, allowing them to access specialist expertise, technology, distribution or underwriting capabilities without taking full ownership of another company.
Aon explains that these approaches are gaining momentum because they can offer a more capital-efficient route to growth while reducing some of the integration challenges associated with traditional acquisitions. However, the firm notes that hybrid structures also bring their own considerations, including governance, accountability, operational control and reliance on external partners.
The discussion has shifted beyond the traditional choice of buying or building. Instead, insurers are placing greater emphasis on selecting the right combination of ownership, investment, control and integration to meet long-term strategic objectives. Aon believes insurers are operating in an environment where consolidation is becoming increasingly selective, driven by softer market conditions, higher funding costs and greater scrutiny of capital efficiency, earnings resilience and execution risk.
The firm says this changing landscape is encouraging insurers to rethink how they use mergers and acquisitions. Rather than viewing acquisitions as the default route to expansion, Aon argues that insurers are increasingly matching transaction structures to specific business needs.
A full acquisition may create unnecessary integration challenges, while developing new capabilities internally may take too long. Equally, poorly structured partnerships can leave uncertainty over governance, commercial returns and decision-making responsibilities.
“For most insurers, the hardest part isn’t executing a transaction. It’s being clear about what problem they are actually trying to solve,” commented Kathleen Monaghan, Executive Managing Director for Capital Advisory in North America. “Growth choices look very different when framed through capital resilience, earnings volatility and execution realities, rather than deal opportunity alone.”
According to Aon, hybrid pathways bridge the gap between acquisitions and organic growth, giving insurers greater flexibility to pursue expansion while balancing capital deployment, operational capacity and strategic priorities.
Aon says acquisitions continue to play an important role where speed, scarce assets or competitive pressures justify the investment. However, the firm argues that successful deals now require a much clearer strategic rationale, as integration complexity, cultural alignment, talent retention and future earnings quality all influence whether long-term value is achieved.
The firm notes that many acquisitions lose value after completion, particularly during the integration process. Aon believes hybrid structures can help insurers focus on securing the capabilities they need, such as underwriting expertise, technology, distribution networks or investment returns, without necessarily taking ownership of an entire business.
Piers Johansen, Managing Director, Mergers and Acquisitions, Europe, Middle East and Africa, said: “Buying still makes sense but only when it solves a very specific, time-critical constraint. Where insurers get into trouble is treating M&A as a general growth lever rather than a targeted response to a clearly defined need.”
According to Aon, hybrid growth structures allow insurers to gain access to selected assets, capabilities or revenue opportunities while limiting the level of ownership and operational integration required. These arrangements may include investments, strategic alliances, risk-sharing structures, distribution agreements or other forms of capital participation, depending on the intended outcome.
Aon argues that the focus is increasingly moving away from ownership itself and towards securing the capabilities and commercial advantages that support long-term growth. The firm highlights carve-outs as one example, allowing insurers to acquire or invest in specific portfolios, business units or capabilities instead of purchasing an entire organisation. According to Aon, this more targeted approach can reduce costs, simplify integration and better align investment with strategic priorities.
Aon says hybrid models can include minority investments, strategic partnerships, recapitalisations, carve-outs, selective acquisitions, renewal rights transactions and structures that separate underwriting platforms from balance sheet ownership. The firm believes these approaches provide insurers with greater flexibility to participate in growth opportunities while managing capital and risk more efficiently.
Svenja Pinkepank-Gooder, Aon Client Leader for Insurance, EMEA and UK, noted: “The question isn’t just whether to own. It’s what you need to own to capture the greatest strategic value, while potentially avoiding some of the cost and complexity associated with full ownership. As organisations become more disciplined about capital deployment, we’re seeing greater focus on acquiring precisely what creates value rather than acquiring everything that comes with it.”
Aon says insurers are also reassessing the relationship between ownership and financial returns. “You don’t always need to own a business to participate in the economics associated with underwriting returns. In many cases, investing or partnering delivers the strategic outcome — without introducing integration risk that can undermine value creation,” Monaghan stated.
According to Aon, investment structures that have long been used by private capital, including sidecars and joint ventures, are now attracting greater interest from insurers seeking more flexible growth options. The firm believes this reflects a broader recognition that full ownership is not always necessary to generate value.
Aon also points to findings from its latest Reinsurance Market Dynamics report, which suggest insurers are making greater use of both industry and third-party capital to reduce earnings volatility and deploy capital more effectively throughout the market cycle. According to the firm, acquisitions are increasingly being considered alongside a wider range of growth options rather than as the default strategy.
Aon notes that hybrid models can offer strategic advantages, but also require careful management of governance, regulatory obligations, partner alignment, operational oversight and execution risk.
The firm says global reinsurer capital reached approximately $790 billion as at 31 March 2026, supported by continued underwriting performance and strong investor demand. According to Aon, this increased capital availability gives insurers greater flexibility when deciding whether to acquire, build or partner.
Aon believes bolt-on acquisitions are also becoming more common as insurers prioritise targeted expansion over scale. Rather than pursuing large, complex transactions, organisations are increasingly seeking acquisitions that fill specific capability gaps, strengthen product offerings or expand into selected markets.
According to Aon, these smaller transactions can support more disciplined capital allocation while providing access to specialist underwriting, digital or data capabilities, although success still depends on effective execution.
Colin Gleeson, Managing Director, Strategy and Technology Group, United Kingdom, added: “Technology and AI are reshaping the core of insurance M&A, but the role they play depends on deal intent. Bolt-on acquisitions are often about securing specific technology skills or capabilities — such as algorithmic underwriting — while larger transactions are primarily about accessing markets or clients and deploying capital.”
Aon concludes that ownership should be viewed as one element of a wider growth strategy rather than the strategy itself. The firm believes insurers should assess whether a particular structure genuinely strengthens their competitive position after considering capital requirements, earnings resilience and organisational readiness.
“The real risk isn’t whether you can get a deal done — it’s whether that deal genuinely advances your strategic objectives once capital impact, earnings volatility and execution realities are factored in,” Monaghan further added.
