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Aon set for further WTW divestments to appease NZ regulators

12th July 2021 - Author: Charlie Wood

Re/insurance broker Aon has been instructed by New Zealand regulators to make further divestments if its proposed mega-merger with rival player Willis Towers Watson is to be approved.

Aon logoAon was cleared to move ahead with its acquisition of WTW by the European Commission last week, in an agreement that was dependent on a significant number of concessions aimed at boosting competition elsewhere in the sector.

The US’ Department of Justice has been less willing to accommodate the merger, accusing Aon of attempting to create a “broking behemoth” and filing a civil antitrust lawsuit that, as things stand, represents the deal’s biggest threat to date.

As of this morning, New Zealand’s Commerce Commission says Aon must divest certain parts of WTW’s business, both overseas and in New Zealand, to Gallagher.

The proposed divestments to Gallagher includes the global reinsurance business of WTW (excluding in mainland China and Hong Kong) and certain parts of WTW’s commercial risk broking (CRB) business overseas, including:

  • Global aerospace manufacturing risk and space risk
  • Cyber risk in the UK, based in London
  • CRB in France, Germany, the Netherlands and Spain, for all risk types
  • FinPro and Property & Casualty serviced in Europe or the UK relating to large multinational customers headquartered in France, Germany, the Netherlands and Spain
  • A number of additional FinPro and Property & Casualty contracts for multinational customers-
    FinPro contracts with a number of large multinational customers headquartered and serviced in the UK
  • Further offshore capability with regard to captives

Additionally, New Zealand regulators want to see the divestment of WTW’s largest CRB customers serviced out of New Zealand along with various tangible and intangible assets.

Aon and WTW will need to also ensure that the proposed acquisition won’t result in any aggregation in the relevant reinsurance market.

Furthermore, they must reduce the level of aggregation between Aon’s and WTW’s CRB businesses and guarantee that Gallagher/Crombie Lockwood has the necessary scale, expertise and global reach to allow it to effectively compete to supply CRB services to large and/or complex clients.

The Commission is assessing whether this deal resolves its preliminary competition concerns and as part of its assessment will be contacting a range of market participants.

A final ruling is expected by 20 August; However, this date is subject to change should any of its requirements not be met.

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