By Manya Saini and Ananya Palyekar
(Reuters) -Aon agreed on Wednesday to sell a majority of NFP’s wealth business to private equity firm Madison Dearborn Partners for $2.7 billion, as it looks to sharpen focus on core insurance brokerage operations.
Aon had acquired privately held NFP in April 2024 from Madison Dearborn in a $13 billion deal, aiming to expand in the fast-growing middle-market for insurance brokerage, wealth management and retirement advisory services.
But the company is now shedding some of those assets. Wealth management, according to analysts, was a non-core business for Aon, which has traditionally focused on insurance brokerage and risk advisory.
“In this macro climate, with rates still high, M&A financing tighter, and capital markets rewarding focus over empire-building, shedding non-core assets is the new flex,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
“It (the deal) says more about today’s market mood than it does about wealth management itself,” he said.
Insurance brokers serve as a bridge between an insurer and its customers, helping clients find a policy that best suits their needs.
“This transaction (divestment) reinforces our ongoing commitment to investing in and growing our core risk capital and human capital capabilities,” said Aon CEO Greg Case.
Insurance brokerage is often viewed as recession-proof, with companies and households maintaining coverage for property, health and liability even in downturns, making it a steady source of revenue across economic cycles.
The middle-market is a crucial growth area for insurance brokers, offering a large base of midsized firms that need sophisticated risk, retirement and benefits advice but lack in-house resources.
As part of the deal, several businesses, including Wealthspire Advisors, Fiducient Advisors, Newport Private Wealth and related platforms will return to Chicago-based Madison Dearborn.
The deal, expected to close in the final quarter of the year, was first reported by the Financial Times.
Goldman Sachs was the financial adviser to Madison Dearborn, while UBS Investment Bank and Moelis advised Aon.
(Reporting by Ananya Palyekar and Manya Saini in Bengaluru; Editing by Harikrishnan Nair, Shinjini Ganguli and Shilpi Majumdar)
