Residents of Chicago are still getting used to calling the former Sears Tower the Willis Tower. But the recently announced Aon/Willis Towers Watson pairing affects far more than a building name.
FIVE NEW REALITIES FROM AN AON/WILLIS TOWERS WATSON PAIRING
Headquarters will be in London, but the move’s impact will be felt around the globe
By Michael Wayne
Just over a year ago, Aon announced that it was calling off a potential acquisition of Willis Towers Watson (WTW). Now, the acquisition is back on, with the world’s top two brokers ready to combine equity value to the tune of $80 billion. Irish takeover rules will govern the $30 billion transaction, but the deal also will need to obtain approvals in the United States and in many other countries.
Granted, we would most likely see some consolidation and combining of positions and offices, but (Aon/Willis Towers Watson workforce) numbers are eye-opening if they hold.
The acquisition will create many new realities—certainly more than the five presented here.
Aon/WTW would be the largest broker by total and U.S. brokerage revenues. Based on 2018 figures, Marsh & McLennan Cos. Inc. had total brokerage revenue of more than $16.8 billion. Aon and WTW’s combined total for the same time period would have been $19.1 billion-plus. When it comes to the U.S. numbers alone, the totals are $7.5 billion to $8.6 billion, respectively.
The new Aon/WTW group would have the largest workforce and the most offices worldwide. Granted, we would most likely see some consolidation and combining of positions and offices, but numbers are eye-opening if they hold. In 2018, Marsh & McLennan Cos. Inc. had 75,000 employees. Aon/WTW’s merged workforce would total 93,300—almost a 22% advantage. Offices? Marsh & McLennan Cos. Inc. had 727, while Aon/WTW would have had 975—just over 29% more.
Despite the acquisition, Marsh & McLennan Cos. Inc. would still be the largest broker by revenue in commercial retail insurance. It would also remain the largest captive manager in terms of number of captives managed and captive premium volume. Going off of 2019 numbers, Marsh & McLennan Cos. would still lead the way with $8,138,000,000 in commercial retail brokerage revenue. Aon/WTW would lag behind with $6,898,000,000—a 16.5% difference. Excluding protected cell companies or 831(b) captives, Marsh & McLennan Cos. Inc. managed 1,296 captives to Aon/WTW’s 1,163. In terms of premium, that equates to a difference of $53,808,723,522 to $44,780,600,000.
The Aon/WTW entity would be the largest broker by revenue in reinsurance and employee benefits. Falling back on 2018 figures, Aon/WTW would have reinsurance revenue of $2,464,000,000 to Marsh & McLennan Cos. Inc.’s $1,565,000,000. The disparity is greater percentagewise when talking about employee benefits revenue. While Marsh & McLennan Cos. Inc. would claim just under $5.1 billion, Aon/WTW would top $7.6 billion.
With the completion of the acquisition, Aon will have swallowed up 60% of the top 10 brokers from 1990. Some of us don’t want to admit it, but 1990 was 30 years ago. At that time, Aon was trading as Rollins Burdick Hunter, employed just over 3,500 people, and had gross revenues of $316,400,000. Marsh & McLennan Cos. Inc., of course, was the world’s largest broker back then. The agency employed 23,600 individuals and had a gross revenue of $2,455,400,000. As of right now, four of the top 10 brokers from 1990 make up what is today Marsh & McLennan Cos. Inc.
Thinking about all of the reverberations the Aon/Willis combination will have is pretty daunting. While the headquarters of this new entity will be in London, England, the impacts will travel around the globe in varied ways. Undoubtedly, residents of Chicago are still getting used to calling the former Sears Tower the Willis Tower. That change only took place 11 years ago. While the naming rights deal won’t expire until 2025, there is likely to be some movement prior to that. There’s already an Aon Center in Chicago—the former Standard Oil Building. One way or another, the organizational tenants of one of those edifices is certain to have some business disruption ultimately: new address, new business collateral needed, unexpected expenses to account for fairly quickly, and more.
The move is huge within our industry, but it’s amazing how many outside of the business will be affected and all of the ways that they will.
Michael Wayne is a freelance writer focused on insurance.