Aon and Willis Towers Watson (WTW) Take Important Step Toward the Close of Proposed Combination with Agreement to Sell Set of WTW Assets to Gallagher
Aon plc (NYSE: AON) and Willis Towers Watson (NASDAQ: WLTW) announced they have signed a definitive agreement to sell Willis Re and a set of Willis Towers Watson corporate risk and broking and health and benefits services to Arthur J. Gallagher & Co. (Gallagher). These businesses will be divested for a total consideration of $3.57 billion.
The agreement resolves questions raised by the European Commission and is intended to address certain questions raised by regulators in certain other jurisdictions. Aon and Willis Towers Watson continue to work toward obtaining additional regulatory approval in all relevant jurisdictions, including the United States, where regulators are conducting an independent review of the Aon and WTW combination.
“This agreement demonstrates strong momentum on the path to close our proposed combination with Willis Towers Watson,” said Greg Case, Aon’s CEO. “We’ve used this time to align our future leadership team around a one-firm culture that will create new opportunities for colleagues, accelerate innovation on behalf of clients and deliver shareholders the long-term value creation they have come to expect from our team.”
Aon remains positioned to further build on the firm’s track record of over a decade of progress on key financial metrics and achievement of external commitments. The pending combination with Willis Towers Watson is expected to deliver:
Revenue growth, margin expansion through delivery of better solutions, increased cash flow and earnings growth and a strong balance sheet, to generate attractive returns for shareholders in the future.
$800 million of cost synergies1, taking into account this divestiture and other potential remedies.
Allocation of any divestiture proceeds according to Aon’s ROIC framework, in which the firm expects that share buyback will continue to be its highest return activity.
Accretion to adjusted EPS, reflecting the synergy potential of the combination, consistent with initially announced accretion projections in year three and over the long term.2,3
Aon and Willis Towers Watson continue to progress with their integration planning, most recently highlighted by the announcement of the future leadership team that, following the close of the combination, will collaborate to deliver new sources of value to clients and create new opportunities for colleagues.
“We announced this combination knowing that the complementary capabilities of our two firms would allow us to deliver more value to clients and opportunities for colleagues. The events of the last year have only reinforced that rationale, and this announcement is an important step toward realizing that potential,” said John Haley, Willis Towers Watson’s CEO. “We appreciate the extraordinary value these colleagues have delivered to our clients and our company. We are confident they have a bright future at Gallagher.”
Gallagher is a global leader in insurance, risk management and consulting services – generating more than $6 billion in 2020 revenue. The company is headquartered in Rolling Meadows, Ill. and has more than 34,000 employees in 56 countries.
Gallagher has agreed to purchase a group of businesses from Willis Towers Watson that includes:
Willis Re operations globally, excluding operations in mainland China and Hong Kong;
Global cedent facultative reinsurance, excluding operations in mainland China and Hong Kong;
Corporate Risk and Broking business unit known as Inspace globally and certain business undertaken for Aerospace Manufacturing clients;
Corporate Risk and Broking services in certain countries in Europe (France, Germany, the Netherlands and Spain), excluding Affinity; Bermuda; cyber in the UK; and certain accounts in the Houston and San Francisco offices in the U.S.;
Corporate Risk and Broking services for Property & Casualty and Finex insurance in the European Economic Area, UK, U.S., Brazil and Hong Kong relating to certain large multinational companies headquartered in France, Germany, the Netherlands and Spain;
Corporate Risk and Broking Finex accounts relating to certain large multinational companies headquartered in the UK; and
Health & Benefits business units in France, Spain and Germany.
The transaction with Gallagher is contingent on the completion of the pending Aon and Willis Towers Watson combination, as well as other customary closing conditions. While Aon and WTW are working to complete their combination as soon as possible during the third quarter of 2021, the completion remains subject to the receipt of required regulatory approvals and clearances, including with respect to United States antitrust laws, as well as other customary closing conditions.
1 There are various material assumptions underlying the synergies, which may result in the synergies and other cost reductions being materially greater or less than estimated. The estimates should therefore be read in conjunction with the bases and assumptions for these synergy numbers, which are set out in Appendix I of the Rule 2.5 Announcement made on March 9th, 2020, along with the reports accompanying such statements in Appendix 4 and Appendix 5 to the Rule 2.5 Announcement.2 This statement should not be construed as a profit forecast or interpreted to mean that the profits or earnings of Aon will necessarily match or be greater than or be less than those for the relevant preceding financial period or any other period.3 Statements in this announcement that the combination of Aon and Willis Towers Watson is accretive to adjusted EPS should not be interpreted to mean that Aon earnings per share in the current or any future financial period will necessarily match or be greater than or be less than those for the relevant preceding financial period.
Willis Towers Watson commits its delegated investment portfolios to net zero
Willis Towers Watson Investments announced that it is targeting net zero greenhouse gas emissions by 2050 at the latest, with at least a 50% reduction by 2030*, in its fully discretionary delegated investment portfolios.
Craig Baker, Willis Towers Watson’s Global Chief Investment Officer, said: “Climate change, and a just transition to net zero greenhouse gas emissions, is a systemic and urgent global challenge. We believe that working to achieve net zero by 2050 in our discretionary portfolios is completely consistent with the financial goals we have been given by our clients as climate change has the potential to impact returns across multiple asset classes. We have already embedded this in our investment process and ultimately in the portfolios we are managing and stewarding.
“Being strategically ahead of a net zero transition will, in our opinion, significantly improve risk-adjusted returns for our clients. This will come from two sources – ‘better beta’ due to more effective stewardship and ‘alpha’ as the mispricing of climate issues is resolved. We think that understanding this transition will be one of the biggest sources of alpha across all asset classes and that this alpha opportunity is likely to be greatest in the next few years. We will therefore target pathways to net zero that seek out pricing opportunities while delivering a reduction in emissions of more than 50% between 2015 and 2030, consistent with the goals of the Paris Agreement.
“Measurement of our progress and that of the whole investment industry towards stewarding the transition to a net zero and climate-resilient economy is an important issue. There is no single definitive metric that can be used to measure progress and the data and analytics in the climate space are rapidly evolving. We are therefore investing heavily in leading analytics in this space, including our proprietary Carbon Journey Plan methodology, the ‘impact measurement framework’ that we have developed together with other industry participants via the Thinking Ahead Institute, our acquisition of Acclimatise in December 2020, and the arrival of the energy finance team from the Climate Policy Initiative in January 2021.
”We will also continue to work with our advisory clients to set out and deliver on their own climate-related goals via Carbon Journey Plans, including analytics on how climate change might impact liabilities as well as assets.”
In addition to integrating climate risk into its multi-asset investment process, Willis Towers Watson also offers a range of multi-manager funds where sustainable investment is a key part of the investment proposition, which clients can use to help them achieve their sustainable investment goals.
Willis Towers Watson advises on CA$1.8 billion annuity transaction involving Sun Life, iA Financial Group and Brookfield Annuity
Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company, in collaboration with Sun Life, iA Financial Group and Brookfield Annuity, announced a group annuity buy-out transaction of CA$1.8 billion for over 6,000 members of the General Motors of Canada Company salaried pension plan who retired prior to June 1, 2020.
Marco Dickner, Retirement Risk Management Leader, Canada, at Willis Towers Watson, said “This deal is ground-breaking because it demonstrates that Canadian insurers can now effectively meet plan sponsors’ needs for jumbo transactions, a milestone in the evolution of pension risk transfers in Canada.”
Brent Simmons, Head of Defined Benefit Solutions at Sun Life, added “We’ve finally cracked the CA$1 billion mark for a single insurer in a single day with Sun Life’s CA$1.1B share of the deal.”
iA Financial Group’s share is CA$0.6 billion while Brookfield Annuity covers CA$0.1 billion.
Éric Jobin, Executive Vice President, Group Benefits and Retirement Solutions, iA Financial Group, said “This deal is historic for the Canadian industry as it highlights our capacity to support clients of all sizes and help them to transfer risks through the purchase of annuities.”
Paul Forestell, President & CEO, Brookfield Annuity, added that “This transaction demonstrates our ability as an insurer to collaborate on creative solutions that help employers provide increased benefit security and peace of mind for their annuitants.”
Under an annuity buy-out, an insurance company assumes responsibility for making pension payments to plan members in exchange for a premium from the pension plan sponsor. This group annuity transaction involves the largest asset in-kind transfer in Canadian history. In this arrangement, most of the pension plan investments were not sold but transferred to the insurance partners in kind.
Aon’s $30 Billion Bid for Willis Towers Watson Faces EU Antitrust Warning: Reuters
(Reuters) BRUSSELS – Aon is set to be hit with an EU antitrust warning over its $30 billion bid for Willis Towers Watson unless it offers concessions in the coming weeks, two people familiar with the matter said.
The deal, announced a year ago, would create the world’s largest insurance broker, putting the merged entity ahead of world No. 1 Marsh & McLennan Cos. Inc.
The insurance industry has seen a wave of consolidation triggered by falling valuations, companies seeking to boost their business models, soaring COVID-19 related claims, and other challenges such as climate change.
The European Commission, which suspended its investigation into the deal last month while waiting for Aon to provide requested information, is concerned the deal may drive up prices and hold back innovation. The EU enforcer and Aon declined to comment.
The Commission is readying a statement of objections, a charge sheet setting out possible competitive harm due to the deal, the people said.
Such a move would lengthen the EU regulatory process and potentially derail Aon’s hopes of closing the deal in the first half of this year.
Aon can stave off the charge sheet by offering concessions to address EU regulators’ concerns. The company has been in informal discussions about concessions but has not made an official offer to date, the people said.
(Reporting by Foo Yun Chee; editing by Jan Harvey)
Willis Towers Watson to Pay $2.1M Cash Retention Agreements for 4 Executives
The retention agreements provide for the payment of cash awards to the executives upon their successful completion of their duties through the closing of the merger with Aon, subject to the condition that the closing occurs no later than July 20, 2021, said the SEC filing.
Under the retention agreements, Burwell, Wickes, Hess and Gunn are each eligible to earn a cash amount of up to $750,000, $487,500, $487,500 and $420,000, respectively, based on the number of whole and partial months each are employed with WTW from Jan. 1, 2021 through the date of the closing of the merger, said the filing.
If the company terminates the executive’s employment without “cause” prior to the closing of the merger, the executive will be entitled to receive the cash award that was eligible to be earned under the retention agreement. The award will be subject to a potential reduction, depending on the number of whole and partial months the executive is employed, said the filing.
If the executive resigns for any reason, or his employment is terminated for “cause,” the executive will not be eligible to receive any portion of the cash award. “Cause” is generally defined in the retention agreements as including the executive’s gross or chronic neglect or negligence in the performance of his employment duties, the executive’s willful misconduct in connection with his employment which is injurious to the company or its affiliates, the executive’s conviction of any criminal act, breach of any restrictive covenants and other obligations applicable to the executive, or the executive’s material violation of any written company policy.
The payment of a cash award under the retention agreement is in lieu of, and in satisfaction of, any right to be awarded a share-based award the executive may have under his employment agreement or terms governing his compensation.
Source: Willis Towers Watson
Willis Towers Watson to Announce Fourth Quarter and Full Year 2020 Earnings on February 9, 2021
Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company, will announce its financial results for the fourth quarter and full year 2020 on Tuesday February 9, 2021 before the market opens.
The company will host a conference call to discuss its financial results at 9:00 a.m. Eastern Time on February 9, 2021. A live broadcast of the conference call will be available online at the Investor Relations section of www.willistowerswatson.com.
An online replay at www.willistowerswatson.com will be available shortly after the call. A telephonic replay of the call will also be available for 24 hours at 404-537-3406, conference ID 3871978.
Willis Towers Watson Postpones Planned Sale of Miller Insurance
Willis Towers Watson is postponing its planned sale of its London wholesale broker subsidiary, Miller Insurance Services.
“Given the current COVID-19 outbreak and associated uncertainty, we have paused our current efforts to explore strategic alternatives for Miller. WTW and Miller remain committed to the process and will make an announcement in due course,” said a statement issued by WTW on Friday, April 3. In a Feb. 20, 2020 filing with the U.S. Securities and Exchange Commission, WTW announced that it was considering “strategic alternatives” with respect to Miller, in which it purchased an 85% stake in 2015.The company is not commenting on the status of its planned merger with Aon, which was announced on March 9, at the onset of the COVID-19 crisis.