Life after Aon The broking sector’s mega-marriage failed, but Willis Towers Watson is confident about being single again By John Deex
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he merger of Aon and Willis Towers Watson (WTW) would have created the world’s largest insurance brokerage – a global giant with a combined equity value of $US80 billion. The deal was first mooted in March 2019, before fading like a mirage and reappearing in more substantial form a year later. The merger was subject to regulatory approval – something which, thanks to US regulators, ultimately could not be achieved. Competition concerns sounded the death knell for the project in July this year, and the companies separated. Aon paid WTW a $US1 billion termination fee – but having gone so far down the road, how difficult is it to turn back? WTW Head of Australasia Simon Weaver says while much time and effort when into preparing for the merger, WTW is stronger for it. “In terms of how involved it was and how far the business got down the track, it was a drawn-out and extensive period,” he tells Insurance News. “But what’s come out of it is really illuminating. I can’t speak for the other side, but from our side it’s probably brought us out re-energised, and certainly refocused and confident and optimistic.” WTW’s new global leadership team hasn’t been slow in repositioning the company, which has 45,000 employees in 140 countries. It already has a new strategy rolled out – “grow, simplify, transform”. One unexpected aspect was the decision in August by the newly separated WTW to go ahead with the divestment of its highly regarded reinsurance business to Arthur J Gallagher. That sale, worth up to $US4
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billion, was originally intended to ease European competition regulators’ concerns about the Aon merger. However, WTW will retain its facultative reinsurance operation and some corporate risk and broking units in Europe that were originally also up for sale. Mr Weaver says no confidential information was shared between Aon and WTW, but being able to compare his company to a major global competitor “had many benefits”. “It allowed us to compare strategies, processes, and systems and people. Knowing how we stacked up against a major competitor allowed us to come out feeling actually very confident about our independent status. “It has given us a clear picture of where we want to focus and where we want to invest.” And while some staff left as the merger process progressed, Mr Weaver says they’ve returned in droves since the deal collapsed. “No doubt globally we lost people. We’ve been open about that. But we didn’t lose them because they didn’t want to be part of Willis Towers Watson. We lost them generally because of uncertainty around the future. “Here in Australia, certainly, our competitors were looking to unsettle us. But actually, over the period we’re talking about, we hired more people than we lost.” Simplifying the complex global broking business means cutting the number of separate geographies and business segments, and aiming for easier-to-navigate internal platforms, enabling employees to work more efficiently and get to market faster. The “transform” part of the strategy targets efficiencies, particularly in real estate
as the post-COVID work environment settles down. As for growth, WTW aims to be earning $US10 billion plus in revenue within three years. Growth is also a key focus for the local business, which has 700 employees but “isn’t yet at the scale of Marsh or Aon”. “We’re a pretty significant business, but as a business we feel we should be bigger,” Mr Weaver says. “We’ve identified Australia and New Zealand as priority areas to invest in. We see an opportunity in the market because there’s a bit of a disruption going on, but also the model we’re developing and the areas we’re focused on have a lot of relevance for clients here. “I want to double our revenue in five years. That’s our internal target – it’s pretty aggressive. “We’ll be building off a strong base, but to get to double the size it’s going to be a mixture of organic growth and hiring people and teams. But also, we’ll look at acquisitions if we find those that are relevant and fit in with our own culture.” Mr Weaver believes that aligning to client demands and market trends will fuel the growth he’s looking for. He also wants WTW to be a long-term adviser to clients, backed by deep data analytics and benchmarking. There’s opportunity in the current hard market, he says, because large, sophisticated buyers are “not particularly well served” by other brokers. “The reason I say that is because board agendas have moved towards a focus on emerging risks. And we’re finding the
