The Reinsurance Daily

Aon's $17B USI Bid Signals Broker Consolidation as ILS Capital Swells to $144.5B

By The Reinsurance Daily Editorial ·

Aon's $17B USI Bid Signals Broker Consolidation as ILS Capital Swells to $144.5B

Aon Reports ILS Capital at $144.5B, Citing Foundational Market Role

Aon has quantified the Insurance-Linked Securities (ILS) market at $144.5 billion as of H1 2026, marking a $3.5 billion increase since the end of 2025. This represents a 2.5% growth in the first half of the year alone. The broker's analysis highlights the sector's sustained expansion, recording a five-year compound annual growth rate (CAGR) of 8.3%. This growth outpaces that of traditional reinsurance capital, which posted a CAGR of 4% over the same period. Aon characterizes this alternative capital as a "foundational" component of the global reinsurance market, not merely a supplementary or opportunistic source of capacity. The consistent growth demonstrates investor appetite and the increasing institutionalization of ILS as a core component of cedant risk transfer programs.

ILS has become a foundational element of the global reinsurance market, and we expect its influence to continue to grow as investors become more comfortable with a wider range of risks and structures.

AM Best Flags Discipline as Prerequisite for Casualty ILS Growth

In a recent commentary, rating agency AM Best underscored that rigorous underwriting discipline and enhanced risk transparency are critical for the successful development of a casualty ILS market. While the property cat ILS space is mature, the extension into longer-tail casualty lines introduces complexities around loss development, data quality, and modeling. AM Best's position suggests that for casualty-linked structures to gain traction and secure investor confidence, cedants and managers must provide a far greater degree of data granularity than is typical in traditional reinsurance placements, with a specific focus on projecting ultimate losses.

Resolute Global Advocates for Blended Reinsurance Portfolios

Resolute Global Partners, an investment manager overseeing assets between $2.85 billion and $3 billion, is championing a blended reinsurance portfolio strategy. This model combines traditional reinsurance risks with ILS instruments, arguing it offers a more compelling risk-adjusted return profile than pure-play ILS funds focused solely on property catastrophe risk. By diversifying across different lines of business and instrument types, Resolute suggests investors can mitigate the volatility inherent in cat-exposed strategies and achieve more stable, less correlated returns. This approach targets investors seeking access to reinsurance risk without concentrated exposure to peak perils.

Aon Nears $17B Acquisition of USI from KKR

Aon is reportedly in late-stage negotiations to acquire USI Insurance Services from its private equity owner, KKR, for approximately $17 billion. The deal would represent a significant consolidation in the US brokerage market. USI generates around $1 billion in annual earnings before interest, taxes, depreciation, and amortization (EBITDA), implying a valuation multiple of roughly 17x. KKR, along with Canadian pension fund Caisse de Dépôt et Placement du Québec, acquired USI in 2017 for $4.3 billion. A successful acquisition would substantially expand Aon’s footprint in the middle-market and benefits consulting space, creating a dominant force in US distribution.

Delaware Program Subsidizes Export Insurance for SMEs

The state of Delaware is actively subsidizing insurance costs for small and medium-sized enterprises (SMEs) to stimulate international trade. Through its State Trade Expansion Program (STEP), the state offers grants of up to $10,000 per company to cover export-related expenses, including credit and cargo insurance premiums. Last year, the program disbursed $85,355 in grants to 117 businesses, which they reported helped generate over $10 million in new export sales. The initiative, funded in part by the U.S. Small Business Administration, directly lowers the barrier to entry for smaller firms looking to mitigate the risks of international commerce.

Illinois Mandates Insurance for High-Speed E-Bikes

The state of Illinois has enacted a new law requiring owners of high-speed electric bicycles to carry liability insurance. The legislation targets "Class 3" e-bikes, which can reach speeds of 28 mph, treating them similarly to mopeds. This move creates a new, mandatory insurance market in the state, responding to the growing prevalence of e-bikes and associated liability concerns. The law addresses a regulatory gap for a product category that has seen rapid growth, with US market sales figures recently surpassing $117.5 million. This requirement will likely spur new product development from personal and specialty lines carriers in the region.

Key Takeaways

Sources

ILS capital is “foundational” in reinsurance, grows to $144.5bn with 5-year CAGR 8.3%: Aon — artemis.bm
Underwriting discipline and risk transparency key as casualty ILS evolves: AM Best — artemis.bm
Why a blended reinsurance portfolio offers a compelling alternative to traditional ILS: Resolute Global Partners — artemis.bm
Aon Close to Acquiring USI Insurance From KKR in $17 Billion Deal, WSJ Reports — insurancejournal.com
Delaware Helps Firms Pay for Insurance, Trade Shows, Travel to Grow Exports — insurancejournal.com
New Illinois Law Requires Insurance for High-Speed E-Bikes — insurancejournal.com
European Insurance and Occupational Pensions Authority — eiopa.europa.eu