AXA’s planned $15.3 billion acquisition of XL Group Ltd. will spur more consolidation among commercial insurers, Keefe, Bruyette & Woods analysts said in a new report.

“The combined AXA/XL would be the world’s largest commercial [property/casualty] insurer,” Meyer Shields and Christopher Campbell wrote. “Not withstanding our own skepticism about scale benefits in specialty commercial P/C, we think this not uncommon perspective will boost most commercial insurers’ shares today and lead to more actual consolidation over time.”

The KBW analysts see Berkshire Hathaway and HCI group as among “plausible” buyers. KBW names AIG as one, too. It recently announced plans to buy Validus Holdings for more than $5.56 billion in an all-cash deal, and the insurer’s CEO Brian Duperreault has said he would selectively look for other acquisition targets.

Which carriers are acquisition targets? The KBW report views AmTrust Financial Services, which is going private, as among the potential acquisition targets. Hartford Financial Services is named, too, as likely seeking acquisitions to expand its commercial/specialty P/C insurance or group benefits platforms. Shields and Campbell also noted that parts of the insurer are being acquired through the sale of its life and annuity runoff Talcott Resolution segment to third parties.

For AXA and XL themselves, however, the merger could have some unintended consequences: the loss of XL executives and employees who survived the $4 billion XL and Catlin Group merger in May 2015. Combined with the $400 million in cost synergies AXA predicts, that could lead to some departures, Shields and Campbell suggest in their KBW report.

“The planned expense synergies, combined with the fact that XL’s workforce has just gone through the XL-Catlin integration, implies a decent amount of talent leakage to competitors perceived (accurately or otherwise) as more stable,” the KBW report points out.

AXA, which is based in France, will pay $57.60 per share for XL Group/XL Catlin, about 33 percent above the company’s closing price of $43.30 on March 2.

Source: KBW