Of the top-tier insurance and reinsurance broking groups it is Willis Towers Watson that is seen as having the highest growth potential in the reinsurance sector, but execution of the strategy will be key, according to analysts at Credit Suisse.
Equity analysts Ryan Tunis and Crystal Lu at Credit Suisse see Willis Towers Watson as having more room to grow in reinsurance, with its Willis Re unit, than peers Aon and Marsh. They also see Willis Towers Watson as having greater international growth potential in insurance and reinsurance broking.
While the analysts aren’t ready to bless the organic growth figures from Willis Towers Watson yet, they say “We do think that the potential growth profile of WLTW is in excess of the larger broker peers provided if execution is successful.”
The Willis Towers Watson business, since the merger between the re/insurance broker Willis and the advising and consulting business of Towers Watson, has spent considerable time rationalising its platform and identifying opportunities for growth synergies, off the back of the enlarged platform.
The an analysts believe that at current valuations and if Willis Towers Watson can hit growth targets, it could offer the best compound annual growth over the medium term, while others could offer EPS benefits.
While “more room to grow in reinsurance” than its peers does signify starting from the back of the top-tier bunch in this sector, the brokerage unit at Willis Re has been picking up pace and analysts are clearly bullish about the prospects for reinsurance to play into overall profit growth at Willis Towers Watson.
How the growth strategy is executed is seen as vital and there are no guarantees Willis Re can achieve the growth the analysts hope to see.
Of course, with competition remaining high in reinsurance markets and the pressure for efficiency in risk transfer rising all the time, broker remuneration is certain to increase in focus over the coming years which could make growth into reinsurance a less profitable endeavour than it is currently seen.
