Willis Towers Watson to divest Willis Re to Arthur J. Gallagher in $4bn deal

Willis Towers Watson (WTW) has agreed to sell Willis Re, its treaty reinsurance brokerage operations, to Arthur J. Gallagher & Co in a deal worth up to $4 billion.

The consideration is made up of an upfront cash payment of $3.25 billion followed by an earnout payable in 2025 of up to $750 million in cash.

The sale of Willis Re for Willis Towers Watson follows last month’s scrapping of a $30 billion merger deal with Aon.

John Haley — CEO of Willis Towers Watson said: “Following the termination of the proposed combination with Aon, we have been taking time to reflect on what we have learned about WTW over the last 16 months and determine how we will move forward as an independent company.

“As part of this, we conducted a review of strategic alternatives for Willis Re, our global reinsurance business. While we highly value Willis Re and our colleagues who contribute to its success, we concluded that divestment was the appropriate path for this business and for WTW.”

In 2020, Willis Re had earned an estimated pro forma revenue of $745 million. The treaty reinsurance business has operations across 24 countries.

It is said to place premium of more than $10 billion annually and represents 750 plus insurance and reinsurance company clients.

Arthur J. Gallagher said that the acquisition will expand its global value proposition within reinsurance brokerage.

The insurance brokerage further stated that Willis Re brings to it a broad suite of analytics capabilities, which include actuarial services, dynamic financial analysis, catastrophe modeling, capital modeling, and rating agency analysis.

J. Patrick Gallagher, Jr. — Chairman, President, and CEO of Arthur J. Gallagher said: “Broadening our reinsurance brokerage offerings has been a strategic objective at Gallagher and this acquisition will significantly enhance our global value proposition.

“We were very impressed with the Willis Towers Watson reinsurance professionals we met during our initial due diligence and strongly believe a combination will significantly enhance our offerings to clients and prospects.

“I look forward to welcoming the 2,200 new colleagues joining us as part of this transaction to our growing Gallagher family of professionals.”

The deal, which is subject to regulatory approvals, is expected to close by end of Q1 2022.

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