Record reinsurance capacity to drive M&A activity in 2026
Aon’s head of market analysis says ‘at this point there are a number of big companies out there that are on the record saying they’re interested in being involved in M&A’
As reinsurance rates soften firms are increasingly looking to deal-making to meet investor demand for growth, Mike Van Slooten, head of market analysis at Aon, says
Record capacity is likely to drive acquisitions in the reinsurance sector as reinsurers look to find growth amid softening rates, the Insurance Day Podcast has heard.
Mike Van Slooten, head of market analysis at broker Aon, said he expects to see more merger and acquisition (M&A) deal-making taking place in the reinsurance sector over the next one or two years as reinsurers turn to inorganic growth to meet investor demand.
Speaking on the Insurance Day Podcast, Van Slooten said: “How do you achieve the growth investors are looking for at a time when pricing is coming down in the primary property market and also in the property reinsurance market? People are looking at inorganic means at this point.”
He continued: “I think we’ve already seen evidence of that in the past six months. We’ve seen some quite big deals announced… there are rumours of deals on a regular basis.
“At this point there are a number of big companies out there that are on the record saying they’re interested in being involved in M&A.”
Last year saw a string of acquisitions in the Lloyd's market, as well as a $2.1bn deal for Bermuda-based re/insurer Vantage Group.
Despite rate reductions for property reinsurance at the January 1 renewals, Van Slooten said pricing was still attractive and “everyone was looking to grow”.
Casualty renewals were a bit more nuanced, he continued. While there was ongoing concern over the US litigation environment, newer players to the market were being attracted by relatively high interest rates and an improvement in underlying primary pricing.
“I think the evidence is primary pricing has actually responded to those difficult areas,” Van Slooten said. “You won’t know for several years, of course, whether it’s actually enough to keep pace with loss costs, but there’s enough there I think to allow people to make the case that when you combine that with the impact of relatively high interest rates… you can make the case for writing the business.”
On the podcast, Van Slooten also discussed the impact of capacity in specialty reinsurance lines as carriers look to benefit from their shorter tail when compared to casualty business.
