By Arasu Kannagi Basil
Aug 31 (Reuters) – Aon said on Monday it will buy rival USI Insurance Services in a $17 billion deal from private equity firm KKR, in one of the biggest insurance acquisitions in recent years.
Mega buyouts have become more typical in the highly fragmented insurance brokerage industry in recent years as companies turn more willing to pay top dollar to bolster their market presence and competitive edge.
The deal highlights Aon’s efforts to further expand its presence in the vast and fast-growing U.S. middle-market insurance segment, which caters to mid-sized businesses.
“USI will substantially enhance our middle-market footprint and expand access for our firm in the E&S (excess & surplus) segment,” Aon CEO Greg Case said. The E&S segment is among the fastest-growing areas in U.S. commercial insurance.
The U.S. middle-market segment is pegged at more than $40 billion and accounts for more than one-third of U.S. commercial property and casualty direct written premiums.
“These (middle-market) companies are a critical engine of the economy, and there is greater opportunity to meet their increasingly complex needs,” Case told analysts.
The USI deal builds on Aon’s $13 billion acquisition of middle-market property and casualty broker NFP in 2024 and will add heft to its health, talent and human capital advisory offerings.
Aon shares slipped 4.8% in early trading. The stock is flat this year through last close.
Founded in 1994, USI is an insurance brokerage and consulting firm offering property and casualty, employee benefits, personal risk, program and retirement services. It began with a single office and has since scaled into the tenth largest U.S. insurance brokerage with about $3 billion in annual revenue.
Other recent mega deals in the insurance brokerage sector include Arthur J. Gallagher’s $13.5 billion acquisition of AssuredPartners and Brown & Brown’s nearly $10 billion purchase of Accession Risk Management, both finalized last year.
Aon, one of the world’s largest insurance brokers, caters to clients in over 120 countries, helping them navigate increasing complexity and volatility.
The USI deal is expected to close in the fourth quarter of 2026 and anticipated to boost Aon’s adjusted profit in 2028. Aon plans to fund the deal through debt and doesn’t expect near-term share buybacks as it prioritizes debt repayment.
USI CEO Mike Sicard will serve as Aon’s president and global CEO of its middle-market platform.
ANOTHER BIG EXIT FOR KKR
For KKR, the USI deal adds to a pickup in exit activity even as some sponsors struggle to offload assets. The second quarter was the largest monetization quarter in its history.
Wall Street analysts have highlighted a growing bifurcation in the sponsor market, with bigger deals getting done more readily.
KKR and Canadian pension fund Caisse de dépôt et placement du Québec bought Valhalla, New York-based USI in a $4.3 billion deal in 2017.
Since then, KKR boosted its stake in the firm and became USI’s largest stakeholder. Under KKR’s ownership, the middle-market broker nearly tripled its revenue.
KKR said the sale represents roughly six times return on its investment in 2017 and a 3.4 times return on the capital invested over the life of its investment in USI.
The USI deal is expected to generate roughly $2 billion of adjusted profit for KKR.
BofA Securities and Citi advised Aon on the deal, while Goldman Sachs, Insurance Advisory Partners and Morgan Stanley advised KKR.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Devika Syamnath)
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