Aon Acquires USI Insurance From KKR for $17 Billion

KKR & Co. is set to reap a $3.3 billion windfall from its deal to sell USI Insurance Services to Aon Plc for $17 billion, a significant exit for a unit that’s invested its balance sheet in long-term private equity bets.

The transaction will generate about $2 billion of adjusted net income for the private equity giant, according to a statement. KKR holds USI, the 10th-largest US insurance brokerage, in its Strategic Holdings unit, a “mini Berkshire” created in 2023 for long-term dividend-paying assets.

USI is the latest exit for New York-based KKR, which last month reported a record quarterly profit fueled by $1.29 billion of asset sales, including Kokusai Electric Corp., which builds semiconductor manufacturing equipment, and HD Hyundai Marine Solution, an engineering-services company.

Related: Aon Acquires USI Insurance From KKR in $17 Billion Deal Targeting Middle Market

After years of dealmaking doldrums, the recent boom in mergers and acquisitions is helping buyout shops sell more of their private equity bets and return cash to shareholders.

Read More: Carlyle Notches Highest Earnings Since 2022 on More PE Exits

Separately on Monday, Apollo Global Management Inc. reached a $4.1 billion cash-and-debt deal to sell Kelvion just eight months after assuming control of the German cooling-equipment maker.

The USI transaction will help expand Aon’s middle-market business.

“We supported significant investments in USI’s people, platform and technology to grow a very good business into a stronger, more scaled and more innovative one,” Chris Harrington, a partner at KKR, said in the statement.

KKR first backed USI in 2017 at a valuation of about $4.3 billion, with three subsequent investments. The sale is expected to generate a 3.4 times return on KKR’s balance-sheet capital invested.

The sale will place KKR’s 2026 adjusted net income “well ahead of its earlier goal of $7 a share, which the manager didn’t believe would be achieved this year,” Bloomberg Intelligence analysts Paul Gulberg and Samuel Radowitz said in a research note Monday.

USI — which offers property and casualty insurance, employee benefits and personal risk and retirement products — has more than 10,500 team members and nearly 200 offices in the US, according to an Aon statement Monday. USI Chairman and Chief Executive Officer Mike Sicard will serve as president of Aon and global CEO of middle market, reporting to Aon CEO Greg Case. Sicard will also join the Aon executive committee.

KKR’s private equity assets under management has roughly doubled since 2020 as it emphasized returning more capital than it calls from institutional backers. The firm earlier this year raised a record $23 billion for its latest Americas buyout fund, defying an industry slump that has seen some of its publicly traded peers fall short of their cash-gathering goals.

KKR expects Strategic Holdings, which currently holds 18 investments, will drive more than $1 billion in earnings by 2030, although it’s still small, with about $232 million in earnings last year.

The USI transaction is expected to be completed in the fourth quarter.

Top photo: Aon Plc CEO Greg Case Photographer: Stefani Reynolds/Bloomberg.