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Aon sees Willis Re as complementary, divestiture unnecessary: Execs

31st July 2020 - Author: Steve Evans

Aon’s senior leadership, including CEO Greg Case, explained today during a quarterly earnings call that the company isn’t expecting to need to divest significantly, as it combines with Willis Towers Watson (WTW) when the acquisition is realised.

aon-willis-towers-watson-logosCase, the Chief Executive Officer of insurance and reinsurance broker powerhouse Aon, said before that his company’s impending combination with Willis Towers Watson is expected to be a positive catalyst enabling accelerated innovation on behalf of its clients.

But one of the questions that remained to be answered was the topic of whether any divestitures would be required.

As in, would anti-trust regulators force certain business units to be sold off to prevent any monopolisation or dominance in specific market once Aon and WTW have merged.

Prime among the areas of broking that is under scrutiny for precisely this reason is reinsurance, with the units Aon Reinsurance Solutions and Willis Re both leading brokers in that space.

But today, Case and his colleagues told analysts that the Aon and WTW combination is continuing apace, aligned with their original expectations for how it would go.

Aon is not expecting any material divestiture of existing businesses or units, from either company, to be needed, the executives said.

On the reinsurance brokerage segment specifically, Aon sees Willis Re’s operations as complementary rather than overlapping its own reinsurance broking unit, which as a result the company hopes will reduce the concerns of any regulators.

Even considering the impacts of the COVID-19 pandemic and how that has affected both businesses and the broader financial markets, Aon is still expecting to realise the roughly $800 million of synergies it had always been predicting thanks to the acquisition of WTW.

Although the company did say that pressures on overall organic growth may persist over the coming months as the effects of the global pandemic continue to develop.

Many in the reinsurance market had been expecting at least a partial divestiture to be required in the reinsurance segment, perhaps even a sale of Willis Re, while the wholesale broking segment is another area that had been highlighted as having the potential to raise anti-trust concerns.

But on reinsurance and bringing Willis Re into the Aon fold, it seems the company is confident regulators will see things its way. Of course that remains to be seen and it is going to be interesting to see how these two broking giants come together, while keeping all regulators and observers happy.

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