$13T Water Build | Hear From Carlyle, HPS, Prosek & More

Good morning, ! This week we’re tracking a record-breaking wave of broker megadeals reshaping insurance M&A, the Fed’s dovish pivot that could rattle insurers’ economic outlook, and why AI has officially overtaken data analytics, cybersecurity, and CX as the top strategic priority for insurance leaders.

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DATA DIVE

The Most Underinsured $13 Trillion on Earth

The world is preparing to pour $13T into water security by 2034, with $7T from private sources. Yet most of these assets—from desalination systems to digital sensors—are running without a financial seatbelt. The report makes one thing crystal clear: insurance isn’t just a climate hedge; it’s the new infrastructure catalyst. With the water treatment industry surging toward $597B, and venture deals pushing $140M this year, investors are waking up. Still, operational and environmental risks remain painfully underwritten. If you’re building or backing in this space, start with a question: “Would I put capital into an uninsurable airport runway?” Because that’s effectively the current state of global water systems. Risk management in this sector isn’t just prudent—it’s overdue.

Read the Full Report HERE

TREND OF THE WEEK

Broker Megadeal Skews the Numbers

North American insurance M&A stayed steady in Q2 2025 with 125 deals, nearly identical to Q1’s 123. But total deal value jumped to $9.9B, thanks almost entirely to one megadeal: Brown & Brown’s $9.8B acquisition of RSC Topco. Without it, the quarter would have looked far less exciting. The trend highlights the sector’s reliance on occasional broker-driven blockbusters to move the needle, while overall deal flow remains consistent. Compared to broader North American M&A, which softened under economic uncertainty, insurance continues to punch above its weight in stability. (More)

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MICROSURVEY

INSURTECH CORNER

AI First. Everything Else Second.

If you're wondering where insurance execs are placing their tech bets, here's your answer: 29% of leaders now cite embedding AI into new ways of working as their top strategic priority, according to KPMG. That puts AI ahead of data analytics (27%), cybersecurity (25%), and customer experience (24%).

It’s not just about hype—AI is rapidly shifting from innovation pilot to operational backbone. From underwriting automation to synthetic data modeling, insurers are re-architecting core functions around generative and predictive tools.

Why it matters: For insurtechs, this is the strongest signal yet that AI-native platforms—especially those focused on workflow automation, risk modeling, and underwriting augmentation—are where budgets are flowing. Selling “AI-enhanced” is no longer enough. The winners will be those enabling full AI integration at scale. (More)

DEAL OF THE WEEK

The $13.45B Middle-Market Power Grab

Arthur J. Gallagher & Co. just pulled off the largest strategic acquisition of a U.S. insurance broker in industry history, closing its $13.45B deal for AssuredPartners. It’s not just a scale play—this is about doubling down on middle-market P&C, niche verticals like Healthcare and Government Contractors, and stretching Gallagher’s tuck-in M&A muscles. The move adds 10,900 employees, ~400 offices, and roughly $938M EBITDAC to Gallagher’s arsenal. Strategic synergies are expected to hit $160M over 3 years, while integration costs will run $500M (because synergy isn’t free). The real flex? Financing this with a mix of debt, equity, and still having dry powder left. As mega-deals go, this one's less “moonshot” and more “buying the launchpad.” (More)

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MACROECONOMICS

Powell’s Signal: A Soft Landing... Off a Cliff?

The Fed is signaling a September rate cut, trying to make the market buy the soft-landing narrative. Powell’s dovish pivot—framed as caution—arrives despite re-accelerating inflation, record M2, and a $1.8T fiscal deficit. Add Trump’s pressure for a 1% rate and rising tariffs, and the policy mix resembles a Red Bull cocktail for inflation. Meanwhile, only 27.3% of PE sponsors believe in a soft landing, with nearly half expecting we’re already in mid-recession. If this is signaling, it’s Morse code during a thunderstorm. Credibility is now the Fed’s most endangered asset. (More)

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TWEET OF THE WEEK

"Don't be distracted by criticism. Remember, the only taste of success some people have is when they take a bite out of you."

Zig Ziglar