Canadian Underwriter

How Aon sees competition regulators’ review of Willis Towers Watson acquisition

November 11, 2020   by Greg Meckbach

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It is still up to regulators to decide whether Aon plc will be allowed to acquire Willis Towers Watson plc, but Aon officials seem confident there won’t be a problem.

During a recent earnings call, Aon executives were asked why they were so confident that they would not be forced to sell part of Willis Towers Watson’s reinsurance broking business.

“We look at that business and we think about it from a client perspective and clients have a huge range of choices,” Aon chief financial officer Christa Davies replied during the conference call Oct. 30. “If you think about the client for reinsurance, it’s an insurer and they can place direct, which a lot of them do. They can place in the capital markets through alternative capital, they can place through insurtechs, and they can place through a huge range of brokers including a number of broker startups.”

If approved, a merger between Aon and Willis Towers Watson is expected to form the world’s largest commercial insurance brokerage.

Both Aon and Willis Towers Watson have multiple offices in Canada. Both are incorporated in the Republic of Ireland with head offices in London, England.

In 2019, Marsh & McLennan Companies Inc. closed its takeover of Jardine Lloyd Thompson Group plc.

The Aon-Willis deal was approved this past August by shareholders of both Aon and Willis Towers Watson.  But that deal is still subject to approval from competition regulators in Canada and other jurisdictions, as well as the Irish High Court.

“We do not expect to provide updates to the regulatory process unless we have something to report,” Davies said Oct. 30 when asked by an analyst where we stand today on the regulatory process and whether it is still on track.

“We do believe we are on track to close in the first half of 2021,” said Davies.

“While that regulatory process has been going on, we have been spending a lot of time setting up and doing the planning on how we are going to come together,” said Aon president Eric Andersen. “We have done a lot of work around the culture of the firms, understanding how each of the firms operate [and] we have been using this period of time to focus on getting to know each other.”

Aon reported US$2.385 billion in revenue in the latest quarter, essentially unchanged from US$2.379 billion in 2019 Q3. Aon had US$1.042 billion in revenue from commercial risk solutions in 2020 Q3, down 1% from US$1.057 billion during the same period last year.

For first nine months of 2020, Aon reported US$8.1 billion in revenue, essentially unchanged from US$8.128 billion for the first nine months of 2019.

Net income rose 24%, from US$228 million in 2019 Q3 to US$282 million in 2020 Q3.

For its part, Willis Towers Watson released its Q3 financials Oct. 29, reporting a 1% revenue increase, from US$1.989 billion in 2019 Q3 to US$2.009 billion in the latest quarter. Net income was $122 million in 2020 Q3, up from US$80 million in 2019 Q3.

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