73% of industry participants we approached feel regulators will require Willis Towers Watson to sell its reinsurance subsidiary Willis Re if the much publicised mega-merger with Aon is to go ahead.
The two broking giants confirmed that a business combination was being pursued back in March 2020.
It’s believed such a transaction could be valued at around $80 billion.
However, just last month the European Commission confirmed that it had opened an “in-depth investigation” to determine whether the combination could have any negative effects on competition.
The investigation only fuelled pre-existing speculation that Willis Re would have to be sacrificed for the deal to go ahead.
Our findings suggest the industry feels such a sale would indeed be necessary, with only 27% believing the merger can proceed without unloading the reinsurance subsidiary.
WTW has already sold off its Miller arm, possibly to avoid any regulatory challenges on competitive grounds.
Interestingly, recent KBW analysis suggested any further divestitures would limit the ultimate expense savings offered by the merger, particularly in light of Aon’s margin expansion track record.
Wells Fargo echoed this sentiment, drawing comparisons to the way JLT offloaded its aviation business in order to secure regulatory approval for its merger with MMC.
Aon executives have already commented on the matter, playing down the need to divest significantly.
Aon CEO Greg Case stated in a 2020 earnings call that the impending merger is expected to be a positive catalyst enabling accelerated innovation on behalf of its clients.
On the reinsurance brokerage segment specifically, Case saw Willis Re’s operations as complementary rather than overlapping its own reinsurance broking unit.
Even considering the impacts of the COVID-19 pandemic, Case still expected to realise the roughly $800 million of synergies possible from an acquisition of WTW.
Regardless of Willis Re’s fate, this mega-merger between Aon And WTW will likely usher the creation of the world’s largest re/insurance broking group, a position currently held by MMC.
View our directory listing the current top 20 re/insurance brokers here.