WTW CEO Haley Confirms Options For Willis Re’s Future Are Explored
Willis Towers Watson (WTW) continues to consider strategic options for the future of its Willis Re reinsurance brokerage business, company CEO John Haley said earlier.
Speaking on Willis Towers Watson’s (WTW) second quarter earnings conference call, Haley said he wanted to address the question of the future of the reinsurance brokerage unit, following the ‘failure of the merger with Aon and the termination of the acquisition agreement with Gallagher.
As a reminder, Willis Towers Watson was to be bought out by rival insurance and reinsurance brokerage giant Aon until the deal was abandoned.
Arthur J. Gallagher (Gallagher) had agreed to acquire Willis Re, the reinsurance unit of WTW, as part of a set of cessions necessary to obtain approval for the merger in Europe and other jurisdictions.
But then, after the merger was abandoned, the sale of Willis Re failed, but now Haley has confirmed that a sale is still an option.
As we explained, this presented a potential option for Gallagher to continue discussions with WTW, on the potential acquisition of Willis Re, a deal that propels Gallagher to third in the reinsurance broker rankings, well above the fourth position.
Now, it looks like the door is officially open, as WTW CEO John Haley has confirmed options for Willis Re are currently being actively explored.
During the earnings call earlier, Haley explained, “I would also like to announce today that we are conducting a review of strategic alternatives for Willis Re, our reinsurance operation.
“The board of directors has authorized us and our advisers to initiate such a process.
“While we highly value the Willis Re platform and our colleagues who have contributed to its success, we believe the time has come to explore strategic alternatives for this business.
“There can be no assurance that the process of reviewing strategic alternatives will result in a sale of Willis Re, or any other change or strategic outcome.”
Haley also later clarified that this was only the Willis Re business for which WTW was looking for strategic alternatives, so none of the other units that had been agreed to divest as part of remedial action.
It has been widely reported in recent days that Gallagher has indeed remained in active discussions with WTW over the future of Willis Re.
Clearly, the brokerage group has a desire to grow its reinsurance business and the acquisition of Willis Re is probably one of the only options that could potentially allow Gallagher to achieve the kind of transformational growth that such a deal. would present.
Of the smaller reinsurance brokerage groups, none would offer the growth opportunity for Gallagher from an acquisition of Willis Re, and it seems unlikely that other independent and smaller reinsurance brokers will want to be acquired at this time. , given the way they have all grown their businesses under attractive market conditions.
As a result, a Willis Re acquisition may be the only game in town, for Gallagher if he is to become the third-largest reinsurance broker.
However, a sale to Gallagher is by no means assured and WTW would be doing its shareholders a disservice if it did not get a much higher multiple for its reinsurance business than what the cession agreement would have provided.
There could also be other buyers, from existing smaller players with a capital injection, to private equity, which could also be attractive options for WTW’s reinsurance unit.
Gallagher remains the most likely buyer however, being a natural fit with the firepower to secure this deal.
It has been suggested that a deal with Willis Re may be imminent and of course we’ll keep you posted if a deal is announced.