Arthur J. Gallagher is set to acquire Willis Towers Watson’s treaty reinsurance brokerage operations in a transaction expected to be completed in Q4 2021.
Under the acquisition agreement, advised by Morgan Stanley, Gallagher will pay an initial gross consideration of $3.25 billion, with a potential additional consideration of $750 million depending on third-year revenue targets, as integration is expected to take around three years.
The acquisition includes all of Willis Re’s treaty reinsurance brokerage operations, which generated $745 million in estimated pro forma revenue for year end 31 December 2020 and operated in 24 countries representing over 750 insurance and reinsurance company clients.
Global insurance brokerage and risk management firm Gallagher will benefit from the acquisition in terms of an expanded global value proposition within reinsurance brokerage, as well as a wide range of analytics capabilities, such as actuarial services, catastrophe modelling and rating agency analysis.
Gallagher will also gain from the addition of a management team, consolidated relationships with leading insurance carriers, and leveraging of its alternative risk and insurance-linked securities business.
J. Patrick Gallagher, chairman, president and CEO, comments: “Broadening our reinsurance brokerage offerings has been a strategic objective at Gallagher and this acquisition will significantly enhance our global value proposition.”
“We were very impressed with the Willis Towers Watson reinsurance professionals we met during our initial due diligence and strongly believe a combination will significantly enhance our offerings to clients and prospects,” he explains.
The acquisition follows the termination of Willis Towers Watson’s proposed business combination with Aon, under which the European Commission stated divestment conditions of the former’s commercial risk business to Gallagher.
