Want Double-Digit Gains From Insurance Stocks? Morgan Stanley Suggests 2 Names to Consider

The U.S. Department of Labor's OFCCP finalized rules in August 2026 reducing affirmative action requirements for federal contractors, eliminating race/sex-based programs and disability utilization goals. The DOJ settled with a consulting firm for $21.5M over alleged discrimination, signaling stricter enforcement. Companies are shifting DEI strategies to focus on anti-discrimination and inclusion without demographic targets. Aon (NYSE: AON) advises on navigating these changes.

Aon plc and subsidiaries secured $4B in term loans and a $3B revolving credit facility from Citibank. The loans will help fund the acquisition of USI Advantage Corp. The term loans have maturities of 2028 and 2029, while the revolving credit facility matures in 2031, with optional extensions. Both agreements include financial covenants related to debt and EBITDA ratios.

Aon expanded its credit facilities with a $4 billion term loan and a new $3 billion revolving credit line to finance its acquisition of USI Advantage Corp. The facilities have varying maturities and interest rates tied to Aon's credit rating, with covenants on leverage and coverage ratios. The moves increase Aon's liquidity and financial flexibility for the deal and future growth.

Aon plc agreed to buy USI Insurance Services from KKR for $17B, aiming to expand its U.S. middle market presence. The deal is expected to close in Q4 2026 and is projected to generate $395M in annual net adjusted EBITDA. Stewart Information Services Corp. acquired Tower Title, a title services specialist in the telecommunications industry. Ignyte Insurance acquired InsureMyTrip, a travel insurance marketplace.

Aon Inc. and GSK Plc issued 30-year bonds, attracting high demand. Long-dated U.S. investment-grade bonds are scarce, with only 5% issued in September. Rising yields and central bank rate hikes are influencing borrowing costs. Alphabet and Amazon have issued long-dated debt, affecting market dynamics. Sysco Corp. may soon offer 30- and 40-year bonds. Scarcity of long bonds impacts pension plans and annuities.

Aon Inc. priced $2B of 30-year notes, receiving strong demand. Firms are reducing long-dated bond offerings due to high yields, with September sales down 50% YoY. Short-to-medium-term bonds now dominate issuance. Higher rates challenge tech firms like Alphabet and Amazon, which rely on long-dated debt for AI infrastructure. RBC's Neil Sun notes elevated yields make long-dated funding difficult.