Re/insurance broker Arthur J Gallagher could still seek an acquisition of all or parts of rival Willis Towers Watson after its deal with Aon fell through this week, according to Bloomberg Intelligence (BI).
Gallagher had a $3.6 billion pact to buy several Willis businesses which was dependant on the Aon deal but dislocation at Willis and uncertainty over the CEO could mean the insurance broker is open to working with Gallagher, BI claims.
The initial deal between Willis and Gallagher was agreed to remedy European Commission concerns and would have added an estimated 9% to 11% to 2020 EPS.
Matthew Palazola, Senior Industry Analyst at Bloomberg Intelligence, said: “The biggest risk in our view was a culture clash but Gallagher has successfully integrated large European businesses in the past.”
The BI report says Gallagher could acquire Willis Re – described as the Crown Jewel of the previous agreement with an estimated $750 million of revenue.
If Willis Towers Watson remains independent, it is thought likely to want to retain Willis Re but if Gallagher moves, it will become the third largest global reinsurance broker from its current fifth.
Willis Re was seen as a regulatory hurdle in the Aon purchase of Willis as it would have made the combined firm a large leader in the reinsurance brokerage market creating a duopoly with Marsh McLennan. This wouldn’t be a worry in a deal with Gallagher.