Credit rating agency Fitch Ratings expects consolidation in the global life insurance industry to continue, although the pace and structure of deals will vary by region.
Deal flow is supported by ongoing efforts by insurers to strengthen balance sheets, improve operating efficiencies and allocate capital to acquisitions that enhance long-term value, Fitch Ratings explained.
While geopolitical tensions, volatile economic conditions, financing constraints, and increased regulation in specific markets may affect deal pricing and timing, Fitch Ratings does not expect these factors to significantly disrupt broader consolidation trends.
Merger structures vary widely across jurisdictions, Fitch said. In Germany, activity is mainly focused on the acquisition of closed or legacy portfolios, with a few specialist runoff platforms active, and around €25 billion of books are expected to be available for transfer in 2026.
In the UK, the market is increasingly moving towards pension risk transfers (PRT), where defined benefit pension obligations and related assets are transferred to insurance companies. Fitch expects UK PRT transaction volumes to grow from GBP38 billion in 2025 to GBP45 billion to GBP50 billion in 2026, driven by continued demand from pension schemes seeking to reduce their risk exposure and interest from insurers in expanding these transactions.
A similar pattern has emerged in the Netherlands, where around €10 billion of pension liabilities are expected to be transferred in 2026. In contrast, markets such as France and several other European jurisdictions have limited PRT activity due to structural differences in pension systems.
In the United States, consolidation has been characterized by a combination of asset-intensive reinsurance and aggressive M&A, including block transfers and en-bloc company sales, while in Asia-Pacific, consolidation has tended to be more selective, with Japan lacking a domestic PRT framework.
Fitch noted that its assessment of insurers participating in the consolidation considers how they manage growth while controlling investment, counterparty, regulatory, governance and execution risks.
Investment strategy is particularly important because acquiring firms may seek higher returns by allocating less liquid or higher-yielding assets. In its M&A analysis, Fitch Ratings uses projected consolidated balance sheets to assess the impact of transactions on key financial metrics, particularly leverage.
For smaller or recurring transactions, Fitch Ratings focuses on the insurer’s record of maintaining capital metrics within rating thresholds and restoring capital metrics following temporary stress caused by the transaction.
Fitch notes that in the UK, PRT remains the main driver of consolidation activity. Numbers are expected to increase further in 2026 as participation in mid-sized and small pension schemes continues to increase.
While increased overall demand for risk transfer is likely to sustain market size, increased competition driven by new entrants and asset manager-backed insurers is expected to intensify pricing pressure and reduce margins. Closed-door trading continues alongside PRT activity, although larger insurers are increasingly focusing on PRT growth, while closed-door trading is typically conducted by smaller or specialist aggregators.
In the Netherlands, Fitch Ratings expects PRT activity to intensify further as pension reform requires a transition from a defined benefit structure to a defined contribution structure by 2028. Dutch insurance companies have taken on more than €7 billion in pension liabilities in recent years, with total transfers expected to reach €20 billion to €30 billion by 2027. The market remains concentrated in the hands of a small group of domestic insurers, with limited participation from international players due to regulatory hurdles and oversight by the Dutch Bank.
Fitch Ratings expects Germany to remain Europe’s most important closed-door consolidation market. With more than €100 billion of legacy liabilities remaining, deal activity is expected to reach €25 billion in 2026.
Rising operating and IT maintenance costs, as well as the complexity of managing a declining effective portfolio, continue to encourage disposals. Fitch Ratings noted that such transactions enable insurers to become more capital efficient and shift focus toward new business generation, although annual transaction volumes may vary depending on the timing of large transactions.
In the United States, Fitch Ratings highlights the continued strength of reinsurance-led consolidation, particularly through affiliated offshore structures linked to alternative investment managers. These arrangements are often used to optimize statutory capital requirements and improve economic efficiency.
The market for large transactions and overall entity sales remains active but irregular, as insurance companies seek to dispose of legacy liabilities, including long-term care and certain annuity books. Strategic partnerships between insurance companies and alternative asset managers continue to expand through acquisitions, minority investments and reinsurance arrangements.
Fitch notes that across the Asia-Pacific region, consolidation is more fragmented and typically driven by portfolio restructuring, strategic exits and balance sheet optimization rather than large-scale closed-book transfers. Japan is increasingly using asset-intensive reinsurance, often involving offshore counterparties such as Bermuda-based reinsurers, as insurers prepare for regulatory changes that take effect from 2026.
Fitch Ratings also highlighted that regulatory developments could affect the structure and attractiveness of merger transactions. In the UK, the Prudential Regulation Authority’s proposed changes to capital requirements for funded reinsurance could significantly increase capital charges from 2026, potentially reducing reliance on such structures and shifting activity towards other forms of capital deployment.
In the United States, proposed changes to the risk-based capital treatment of certain structured assets may affect the investment behavior of insurance companies. In Germany, regulatory approval remains a key feature of portfolio transfers, while in Japan regulators have increased scrutiny of asset-intensive reinsurance, focusing on counterparty exposures and risk concentrations.
Fitch Ratings summarized its view in the following statement from Rishikesh Sivakumar, CFA: “Fitch expects global life insurance consolidation to continue, supported by stable deal pipelines, insurers’ willingness to deploy capital for acquisitions, and the increasing use of innovative deal structures. Unstable macroeconomic and financing conditions and regulatory scrutiny may limit deal volumes but are unlikely to materially inhibit consolidation.”
Overall, Fitch Ratings believes that execution capabilities, integration performance and investment risk management remain central to the assessment of merger activity, particularly where the transaction involves cross-border structures, complex liabilities or subsidiary investment arrangements.