Aon-Willis tie would be bad news for jobs and buyers in wake of Marsh-JLT deal

A merger between Aon and Willis Towers Watson (WTW) would mean more “job carnage” be bad news for buyers but could mean opportunities for smaller brokers, according to sources in the London Market.

Aon made the shock revelation to the market yesterday following speculation in the media that a deal was in the pipeline.

The acquisition of WTW would make Aon the largest broker in the world – but only until Marsh & McLennan’s pending takeover of Jardine Lloyd Thompson is completed. In reality, assuming both deals go ahead, the gap between them would be roughly what it is now.

But the immediate reaction from market commentators was that the deal would mean yet more job cuts for brokers. This would follow hot on the heels of Aon’s restructuring efforts, kickstarted in 2017, which will ultimately cut some 5,000 positions globally. It is estimated that as many as 3,750 individuals could also lose their jobs as part of the fallout from the takeover of JLT by Marsh.

“It means more job carnage, a further lack of choice for insurance and reinsurance buyers and a bigger stick to beat insurers and reinsurers on prices,” said one commentator. “That said, it will mean opportunities for the second division brokers.”

Aon confirmed yesterday (Tuesday March 5) that a takeover of its competitor WTW, the third largest insurance broker, is under consideration in a statement as per Irish regulatory requirements after media speculation initially broke the story.

Shares in WTW rose by more than 8 percent following initial reports of the bid in the media.

Aon stated, however, that any deal was “in the early stages” and would be made via an all-share business combination.

Aon also emphasised that the deal was still being evaluated and there “can be no certainty that any transaction will take place nor as to the form or terms on which any transaction might be pursued”.

Aon concluded its announcement with a caveat that further announcement will be made in due course, as appropriate, and said the information had been prepared in accordance with English and Irish law and Rule 2.4 of the Irish Takeover Rules.