12-03-2020
Aon / WTW merger a response to tech disruption, analysts
Insurance AlertssAon / WTW merger a response to tech disruption, analysts
Analysts at Peel Hunt have underlined the role technology-driven market disruption is playing in Aon’s decision to make a $30 billion-rated move on Willis Towers Watson.
With Lloyd’s investing heavily in ongoing modernisation efforts aimed at lowering brokerage costs, Peel Hunt says the deal could be seen as an antidote to disruption of the commercial broker market similar to what has been seen in the UK Motor sector.
If completed the all-share mega deal will bring together two of the largest commercial insurance brokers in the US and Europe. The move comes almost a year after early stage discussions regarding a potential combination between WTW and Aon collapsed.
Speculation about a possible merger deal between the two broking giants was sparked last week after WTW confirmed that it was exploring “strategic alternatives” for Miller, its wholesale unit. Commentators had theorised that the Miller sale could be preparing the ground for a bigger mergers & acquisitions (M&A) deal, possibly once again with Aon as the brokers wait out the one-year cooling off period between rounds of negotiation.
Now confirmed, analysts say the deal will provide significant scale and room for material cost cutting while protecting fee income. It’s believed the scale of this combination will make it more difficult for the Lloyd’s Market to try and disintermediate commercial brokers such as Aon.
Peel Hunt believes brokers are well aware that their future role in the insurance market will largely depend on the level of investment in technology in order to keep pace with the reforms at Lloyd’s and that there is likely to be disruption in the way brokers transact with the market in the years to come.
Source: Reinsurance News
