JLT Group to acquire Towers Watson’s reinsurance brokerage business

Jardine Lloyd Thompson Group, an international group of risk specialists, announced Friday it will acquire the reinsurance brokerage business of Towers Watson for a cash consideration of $250 million.

Once the deal is completed, Towers Watson’s reinsurance brokerage business will be merged with JLT’s reinsurance business (JLT Re), with combined revenues of $266 million, and 700 people in 35 locations across 17 countries. JLT’s head office location is in London. 

The new combined business will be branded for a transitional period as JLT Towers Re.

Ross Howard, who is currently head of Towers Watson’s reinsurance brokerage business, will become Executive Chairman of the merged operation. Alastair Speare-Cole, currently CEO of JLT Re, will become CEO of the enlarged business. Alan Griffin will step down as Chairman of JLT Re, but will retain a board and advisory role.

Towers Watson’s reinsurance brokerage business generates revenues of $166 million and profit before tax of $26 million.

“As part of the transaction, JLT Re and Towers Watson have entered into an Alliance Agreement that will ensure clients have continued access to Towers Watson’s risk consulting and software services,” JLT noted in its announcement.

“This Agreement will also provide JLT Towers Re with continued use of Towers Watson’s proprietary actuarial models and software, alongside deep analytical and modelling capabilities that will be acquired with the business.”

“This acquisition significantly accelerates JLT’s existing strategy to build out its international reinsurance brokerage operations,” the company said in a statement.

“It combines Towers Watson’s well-established North American and London Market reinsurance businesses with JLT Re’s international reinsurance operations, dynamic brand and strong London Market operation. The combined business will benefit from considerably enhanced scale, capability and market presence.”

The acquisition is subject to regulatory approvals and is expected to complete before the end of the year. The two businesses will be fully integrated over the course of 2014 and 2015. Total transaction and integration costs are expected to be approximately $7 million and $20 million respectively.