American insurance brokers pursue larger mergers and acquisitions amid slowing growth

Over the past couple of years, North American insurance brokers have been actively engaging in more significant acquisitions due to a decline in organic growth rates. The use of debt to finance these mergers and acquisitions (M&A) has raised concerns about credit risk. However, the industry’s robust cash flow and historical resilience to economic downturns have enabled large brokers to take on higher leverage comfortably compared to most other corporations.

While the pace of growth has moderated, U.S. property and casualty premium growth is still projected to be around 4%–5% in 2025–2026, a slight deceleration from the levels seen in the recent past. Companies like Brown & Brown and Arthur J. Gallagher have experienced a slowdown in organic growth, dropping from the high-single-digit increases seen in previous years to low- to mid-single-digit figures in the first half of 2025.

Some key points highlighted in industry analysis reveal a trend towards larger M&A deals, with North American brokers executing approximately $60 billion in large acquisitions over the past two years, a significant increase from past decades. While organic growth may be slowing down, the industry overall is still operating at a decent level. However, challenges such as falling property values and interest rates present obstacles to sustained growth rates.

Factors like inflation and property price depreciation in 2025 have also impacted the insurance market. Previous inflationary pressures that led to premium increases have subsided, while interest rates, though declining, continue to put downward pressure on property values. The cybersecurity and financial/professional lines segments are facing challenges, but casualty insurance remains a reliable source of growth for brokers.

In response to the shifting landscape, insurance brokers have increasingly turned to M&A activities to drive growth. The availability of cheap debt capital has facilitated acquisitions, but larger deals and rising interest costs have increased financial risks for some participants. Despite this, well-capitalized firms such as Aon, Marsh & McLennan, and Arthur J. Gallagher have leveraged their financial strength and diversification to continue their acquisition strategies amid market uncertainties.

Recent M&A transactions in the insurance broker space have seen a surge in deal sizes, with five significant deals totaling $60 billion in a short period. While these transactions have reduced rating headroom for some companies, leading players like Marsh and Aon have maintained healthy balance sheets. They have a track record of successful integration of acquired entities and adjusting leverage post-acquisition.

Overall, the insurance industry is undergoing a period of transition with a focus on leveraging M&A to counter diminishing organic growth. Industry leaders are navigating these challenges by capitalizing on their financial strength, strategic diversification, and successful track records in M&A integration to sustain growth and adapt to changing market conditions.