Fitch Ratings expects European insurance mergers and acquisitions (M&A) to accelerate through 2026, as softer pricing and stable interest rates curb organic growth prospects. The agency identifies specialty and reinsurance, alongside UK, Dutch and German life and European bancassurance, as the primary sectors for increased activity. According to Fitch, acquisitions may strengthen business profiles through improved diversification or competitive positioning, though these benefits may be offset by execution risks, higher leverage and weaker fixed-charge coverage where debt funding is utilised. The report highlights that many European insurers currently report Solvency II (S2) ratios above target ranges. Furthermore, the upcoming EU S2 reform, effective 1 January 2027, is expected to lift ratios by 5 to 7 percentage points on average, and up to 20 percentage points for some groups. This provides what the agency describes as “strong capital capacity” to finance acquisitions, reducing the risk of negative rating actions. In the specialty and reinsurance markets, M&A targets can offer differentiated underwriting and access to Lloyd’s of London (Insurer Financial Strength rating: ‘AA-/Stable’). Fitch identifies Beazley (‘A+/Stable’), Hiscox and Lancashire as the remaining listed London Market targets. The agency also expects large composite insurers and reinsurers to pursue bolt-on acquisitions to add distribution or capabilities. Entities such as Munich Re (‘AA/Stable’), Allianz (‘AA/Stable’) and Generali (‘AA-/Stable’) have indicated a willingness to pursue further transactions. This follows Munich Re’s acquisition of NEXT Insurance in 2025 and AXA’s (‘AA/Stable’) purchase of Prima.
