The global risk management and insurance brokerage firm Willis Towers Watson (WTW) recently acquired Sydney based aviation industry insurance specialist, Aerosure Asia Pacific. The acquisition adds seven new members to WTW’s 300 plus strong Global Aerospace division.
John Rooley (pictured), the London based CEO of WTW’s Global Aerospace division, said his firm regards Aerosure as the leading specialist aviation broker in the region and has worked in close partnership with the company for many years.
“So, the closing of this acquisition was the next logical step in the development of our relationship,” he said.
Rooley said when the deal was getting underway, the only real challenges to it going ahead were outside the deal itself.
One of those issues was the proposed Aon and WTW mega-merger that was cancelled in July after the United States Department of Justice (DOJ) brought an anti-trust lawsuit against the merger.
“It never diluted our desire to close the deal and we anticipated that we would still close it if we had become Aon, but it became a regulatory issue because obviously the regulatory authorities needed to pass the acquisition and the merger of Aon and Willis in the first place before adding yet another business to it,” said Rooley.
The other challenge was the COVID-19 pandemic and the uncertainty about how badly it would impact the aviation industry.
“Cleary a lot of the airlines were particularly affected but Greg [Rector, managing director of Aerosure] and his business was remarkably resilient,” he noted. He maintained his client book and he actually managed to grow during that period and so we were delighted with that.”
WTW’s presence in the aviation business space, said Rooley, is built around four lines of business. The first line is providing insurance services to major airlines.
“We’re fortunate to work with many of the world’s leading airlines providing insurance and risk advice, which is the largest segment of our business.”
Their second line of business is general aviation. Rooley defined that as anything that flies with less than 50 seats, including smaller helicopters and fixed wing aircraft. This is where the Aerosure purchase comes in.
“We have a strong appetite to continue to grow in that segment which is another reason for the acquisition,” he said.
Rooley said Australia has a high proportion of these types of aircraft because of its remote areas where there’s insufficient demand to fill large planes.
“In the region where you guys are, in Australia, Greg and Pat [Doherty, Aerosure’s CEO] and his team are very well known and very strong in that segment and have been partners of Willis for many, many years,” he explained.
In WTW’s third business line, called Aerospace, Aerosure is also strong. Rooley described it as “everything that doesn’t fly.”
“So that would be airports, manufacturers, refuellers, ground handlers, anything at an airport,” he explained.
He said Aerosure provides insurance services for most of the airports in the Australia-New Zealand region.
“That’s an area where we continue to push out initiatives that differentiate us,” he said. “For example, we have the Airport Risk Community, ARC as it’s known, which is a coming together of risk managers from all over the world who share industry issues, talk about topical themes and issues facing the airports.”
The final segment of the WTW business is called Inspace.
“Which includes satellites and launches - anything that is in orbit basically,” he noted. “That segment is extremely specialized and a lot of it is concentrated in the US and Europe but there are elements of it around the world.”
For the last two years, the COVID-19 pandemic has had devastating impacts on the airline industry, bringing airline travel to a standstill.
Rooley said by the middle of 2020, “a lot of the passenger traffic just vanished.”
He said, while you might think aviation brokers were left twiddling their thumbs, in fact, they were very busy.
“We immediately went about trying to renegotiate the premiums payable on their [airline] policies so as to reflect their reduced exposures,” he noted. “Now most airline exposures at the time were fully adjustable so in the event you didn’t fly you got a large return premium at the end of the year.”
However, he said, after that, insurers attempted to protect their businesses by imposing minimums on those policies.
“Those minimums at the time were a guess as to what the right level was because no-one knew whether the world would bounce back in 2021, how quickly it would happen and whether it would happen at all,” said Rooley.