M&A activity among European insurance companies is likely to accelerate in 2026, as weak pricing and stable interest rates constrain organic growth and limit margin expansion, a new report from Fitch Ratings suggests.
The rating agency said the acquisition could strengthen the business’s profile through greater diversification and stronger competitive positioning.
However, these benefits may be subject to execution and integration risks, as well as higher leverage and weaker fixed charge coverage in debt-financed transactions.
Even so, Fitch believes the deal could help support revenue and earnings growth at a time when the industry is grappling with weak non-life product pricing, weak economic growth and stable investment yields.
“A transaction could also increase scale in core markets, improve diversification and cost efficiencies, or facilitate the acquisition of new technologies,” the rating agency added.
Fitch noted potential targets in the specialty insurance and reinsurance market that could offer differentiated underwriting capabilities and diversification benefits, as well as access to Lloyd’s of London.
“We view these factors as drivers of a possible acquisition of Beazley by Zurich, AIG’s acquisition of Convex and the Radian-Inigo deal in 2025,” Fitch explained.
Elsewhere in the report, Fitch notes that many European insurers are reporting Solvency II (S2) ratios above their target ranges, and that these ratios are likely to increase by a further 5-7 percentage points on average, and up to 20 percentage points for some groups, after the upcoming EU S2 reforms come into effect on 1 January 2027.
“This provides strong capital capacity for acquisitions and reduces the risk of negative rating action from M&A. Rated insurers generally have some leeway to issue new debt without violating Fitch’s standard guidance on financial leverage and fixed charge coverage at current rating levels,” the ratings agency said.
Fitch also said it expects acquirers in the UK life insurance sector, including private capital firms seeking longer-term liabilities, to continue to seek to enter 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, as well as risks associated with asset-intensive reinsurance,” the company added.
The Fitch report continues: “We also expect PRT transactions in the Netherlands to accelerate as the country moves from defined benefit pensions to defined contributions, a process that will be completed in 2028. We expect NN Group, Athora, Achmea and ASR Nederland to be among the most active consolidators.
“The German life insurance sector remains favorable for back-office consolidation, with existing insurers such as Viridium, Frankfurter Leben and Athora best suited for further trading. In Germany, as in the Netherlands, we see limited scope for new consolidators to enter the market.
“In markets where bancassurance is prevalent, such as France or Belgium, we expect banks to continue to be interested in owning or increasing the size of their insurance subsidiaries, given the favorable 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 general insurers and reinsurers are also considering bolt-on acquisitions to add capacity or distribution in existing or new markets. For example, Munich Re, Allianz and Generali have all expressed willingness to pursue further mergers and acquisitions. “
