Insurers are increasingly considering minority investments, strategic partnerships and other hybrid pathways as an alternative to full acquisitions, Aon says.

Such deals are becoming a more practical growth route and may allow insurers to access targeted capabilities, returns or distribution without assuming all the risks associated with a complete acquisition, according to the global broker.

“The question isn’t just whether to own, it’s what you need to own to capture the greatest strategic value, while potentially avoiding some of the cost and complexity associated with full ownership,” insurance client leader for Europe, the Middle East and Africa and UK Svenja Pinkepank-Gooder said.

“As organisations become more disciplined about capital deployment, we're seeing greater focus on acquiring precisely what creates value rather than acquiring everything that comes with it.”

Aon says in the current market the bar is higher for justifying the capital commitment for a full acquisition.

Integration complexity, cultural fit, talent retention and forward earnings quality can quickly erode value if the transaction is not matched to a clearly defined need.

But Aon warns hybrid growth structures can also have governance challenges and differing stakeholder objectives, and involve reduced operational control, counterparty dependence, regulatory considerations and execution complexity.

“The real risk isn’t whether you can get a deal done – it’s whether that deal genuinely advances your strategic objectives once capital impact, earnings volatility and execution realities are factored in,” executive MD for capital advisory in North America Kathleen Monaghan said.