Following Arthur J. Gallagher’s agreement to acquire the majority of reinsurance brokerage Willis Re, a Gallagher spokesperson has confirmed that the deal will significantly expand the company’s footprint in the UK and the US, and provide it with scale operations in certain key markets.
It was announced yesterday that Aon and Willis Towers Watson (WTW) reached an agreement to sell Willis Re and certain other WTW assets to Gallagher for $3.57 billion, as part of a remedy proposal to get their $30 billion combination over the line.
With the exception of mainland China and Hong Kong, Gallagher is set to acquire reinsurance broking unit Willis Re’s operations globally. The purchase will significantly expand the company’s reinsurance arm, Gallagher Re, and provide clients with access to greater expertise.
It’s been confirmed to us that the deal is expected to not only significantly expand Gallagher’s existing reinsurance footprint in both the UK and the US, but also give the broker scale in key markets within North America, Europe, and Asia. Notably, this includes Canada, France, Germany, Japan, Malaysia, Singapore, and Australia.
Furthermore, the deal is also expected to provide Gallagher Re with a new, or boost its existing international reinsurance presence in places like Indonesia, Turkey, UAE, Brazil, Argentina, Peru, Mexico, Colombia, and Chile.
Of course, WTW is also active in the insurance-linked securities (ILS) space and has a capital markets focused team in Willis Re Securities.
A Gallagher spokesperson also confirmed to us that Willis Re Securities, both in the UK and the US, is included in Gallagher’s acquisition of Willis Re.
While Gallagher Re is already home to broking teams with expertise in placing reinsurance and retrocession business with ILS fund markets and trading in collateralized structures, the takeover of Willis Re Securities brings some additional expertise to the firm.
The Willis Re Securities team boasts expertise in structuring and bookrunning catastrophe bond transactions, and also in reinsurance sidecar arrangements and other capital market instruments and transactions.
It will be interesting to see how the Willis Re Securities division integrates into Gallagher Re, as the combination has the potential to greatly expand Gallagher’s ILS activities.
Overall, Gallagher expects the integration to take three years. But once complete, the broker expects its reinsurance footprint to be truly global.