Insurance brokers Aon, Willis Towers Watson scrap US$30b merger

An office building with the Aon logo is seen amid the easing of the coronavirus disease (Covid-19) restrictions in the Central Business District of Sydney June 3, 2020. — Reuters pic
An office building with the Aon logo is seen amid the easing of the coronavirus disease (Covid-19) restrictions in the Central Business District of Sydney June 3, 2020. — Reuters pic

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SYDNEY, July 26 — Insurance brokers Aon Plc and Willis Towers Watson Plc said today they had agreed to terminate their US$30 billion (RM126 billion) merger agreement and end their litigation with the US Department of Justice.

The deal would have put London-headquartered Aon ahead of the world’s largest insurance broker Marsh & McLennan Cos Inc.

“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice,” Aon Chief Executive Officer Greg Case said in a statement.

Aon will pay US$1 billion as termination fee to Willis, it said.

In June, the Department of Justice (DOJ) had sued to block the deal, saying it would reduce competition and could lead to higher prices.

The DOJ had alleged that combining the two large insurance brokers would harm competition in reinsurance broking, retirement and pension planning and private retiree multicarrier healthcare exchanges.

A federal judge had narrowed the scope of the lawsuit last week, which came after Aon and Willis agreed to divestitures to win approval in the United States and Europe after discussions with regulators.

The divestitures included Aon’s US retirement unit, US retiree healthcare exchange and retirement business in Germany. Also included was Willis Towers Watson’s global reinsurance business. EU antitrust regulators approved the merger earlier this month conditioned on some of the sales.

Aon ranks second and Willis fifth among US commercial insurance brokers in the US market, according to a survey by Business Insurance magazine.

The other largest brokers in the United States are Marsh & McLennan, Arthur J Gallagher & Co and Alliant Insurance Services Inc.

In April, insurance company Chubb Ltd said it was no longer looking at buying smaller rival, the Hartford Financial Services Group Inc, after the latter rebuffed Chubb’s takeover bids post declining to engage in talks on the US$23.24 billion buyout proposal.

Aon’s shares were up 4 per cent at US$242, while Willis Tower’s stock was down 3.5 per cent at US$218 in pre-market trading. — Reuters

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