Onex Signals Bigger Push into Insurance After AIG Tie-Up
Onex Corp.’s chief executive says the alternative asset manager is open to making more large investments in insurance companies after teaming up with American International Group on a major transaction. The move highlights a growing interest by private capital in the insurance sector, where steady cash flows and underwriting profits can complement traditional private equity returns.
Why insurance is attractive to alternative managers
- Predictable cash flow: Insurance operations often generate long-term premiums and investment income that can be more stable than other businesses.
- Insurance float: The funds insurers hold before paying claims can be invested, offering a durable source of capital for buyers.
- Diversity and scale: Large insurers provide opportunities for meaningful strategic moves—reinsurance deals, legacy book consolidation, or capital injections—that can move the needle for an investor.
Possible strategies and next steps
The CEO’s comments suggest Onex may pursue a mix of approaches: controlled buyouts of insurer subsidiaries, minority stakes in established carriers, or targeted deals for blocks of policies and run-off businesses. Teaming with an incumbent insurer like AIG can also help accelerate transactions by combining industry know-how with private capital.
Risks to watch
- Regulatory scrutiny: Insurance is highly regulated, and large transactions often require sign-off from multiple authorities.
- Reserve risk: Misjudging claims and liabilities can hurt returns.
- Market and interest-rate shifts: Investment returns on insurer portfolios depend heavily on interest rates and market conditions.
What this could mean for the market
If Onex follows through with more big bets, it could spur further consolidation and attract other alternative managers to the sector. For insurers, that means more options for capital partnerships and potential restructuring. Keep an eye on upcoming deal announcements and any regulatory filings that will clarify the scale and structure of future transactions.