Willis Group, Towers Watson to Merge in $18B Deal

Monday, July 6, 2015 | 0

The insurance and reinsurance brokerage Willis Group and the risk-management firm Towers Watson have agreed to merge into one company.

The deal, valued at $18 billion, was structured to keep the companies close to equal -- Willis shareholders will own 50.1% of the company, while Towers Watson's shareholders will own 49.9%, according to a Tuesday press release.

Corporate leadership said the deal will mean efficiencies, reduced costs and increased offerings for clients, and the new Willis Towers Watson will advise 80% of the world's top 1,000 companies. One area where the two companies fit particularly well together, according to the press release, is with Towers Watson's private insurance exchange.

"The opportunity to deliver significant savings to our growing middle market client base with Towers Watson’s market-leading private exchange platform is particularly attractive," Willis Chief Executive Officer Dominic Casserly said in the statement.

Elimination of redundant corporate costs and the achievement of economies of scale will lead to $100-$125 million in savings within the first three years of the deal, according to the press release. The combined annual revenue streams for both companies add up to $8.2 billion.

Corporate leadership expects the deal to close by the end of 2015.

The 12-person board of directors will be split evenly between representatives from each company. Willis Chairman James McCann will serve as chairman of the new board of directors, while Towers Watson chairman and chief executive officer will become the new CEO. Casserly will serve as president of the combined firm, while Towers Watson chief financial officer will serve as the new CFO.

Headquarters of the company will be located in Ireland, where Willis is currently domiciled.

The news comes just as two of the largest workers' compensation carriers in the U.S., Ace Group and Chubb Corp, announced their merger, involving a $28.3 billion acquisition deal.