Willis Towers Watson: Everything you need to know
- Headquarters: London, UK
- Annual revenue: $9.35 billion
- Total assets: $38.5 billion (according to 2020 annual report)
- Employees: 46,100+
- Global operations: 140 countries and markets
- Key people: CEO John Haley
Willis Towers Watson is a global advisory, broking, and solutions company that provides products and services to clients to help them manage risk, cultivate talent, and optimize benefits, while protecting and strengthening institutions and individuals.
Specific services include benefits delivery and administration, human capital and benefits, investment, risk and reinsurance, as well as corporate risk and broking. The company boasts over 25 industry sector-specific teams operating regionally, if not globally, that assist firms with understanding and managing the variety of risks they face.
Moreover, its corporate risk and broking services span everything from cyber and political risk to kidnap and ransom, and product recall, as well as lines like property, trade credit, and executive risks, among others. Through its WillPLACE platform, placement professionals can take advantage of the firm’s proprietary algorithm to create placement recommendations that reflect the marketplace priorities of their individual clients, such as premium competitiveness, claims handling, policy administration, underwriting, and general service.
A rich history
Willis Towers Watson’s roots date back to 1828 when Henry Willis kick-started his career as a merchant, selling imported goods at the Baltic Exchange in London. In 1841, Willis applied for membership at Lloyd’s, and began to broker insurance for the very cargoes of commodities he had previously sold on commission. He later got involved in the hull business, and made a name for himself in marine insurance while founding Henry Willis & Company.
The 20th century saw many acquisitions and mergers between actuarial consulting firms, reinsurers, and brokers, including Towers, Perrin, Forster & Crosby and R. Watson & Sons, as each built out their business and presence across continents. Finally in 2010, Towers Perrin and Watson Wyatt combined to form Towers Watson. In 2016, Willis Group and Towers Watson merged to become Willis Towers Watson.
Some fun facts during this long history include the fact that Willis was the broker for the ill-fated Titanic in 1912, and the hull claim of $1 million was settled in full within 30 days of the tragedy. Then in 1971, Willis was the broker for the moon buggy used during the American Apollo program’s missions to the moon.
Deal or no deal?
In March 2019, Willis Towers Watson was embroiled in a potential mega-deal that would change the landscape of the global insurance market. On March 05, Aon Plc was considering an offer to buy the rival insurance brokerage in what would’ve been the industry’s largest merger … ever. Shortly after, Aon issued a statement confirming its interest in an all-share business combination with Willis Towers Watson.
“The company emphasizes that, at this point, its evaluation of a potential transaction is at a preliminary stage 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,” stated the firm. “A further announcement will be made in due course, as appropriate.”
A day later, the deal was off. Aon issued a statement outlining that because Willis Towers Watson is subject to Irish regulatory requirements, the broker had to make a disclosure at “a very early stage in the consideration.” The statement it issued on March 06 read:
“Consistent with Aon’s stated focus on return on invested capital the firm regularly evaluates a variety of potential opportunities within and adjacent to its industry. Aon had considered such a possibility with regard to Willis Towers Watson. News of that consideration subsequently became public and Aon was required to issue a statement because Willis Towers Watson is an Irish company and is subject to Irish regulatory requirements. As a result of media speculation, those regulations required Aon to make the disclosure at a very early stage in the consideration of a potential all-share business combination. Aon today confirms that it does not intend to pursue this business combination.
“As a result of this announcement, Aon is bound by the restrictions set out in Rule 2.8 of the Irish Takeover Rules. Aon reserves the right within the next 12 months to set aside this announcement where so permitted under Rule 2.8.”
Had the merger gone through, there would have been serious implications for the broader insurance industry and its clientele.
“A mega deal between two of the three largest brokerages in the world has the potential to impact a variety of constituents in the insurance marketplace. For carriers, brokers are the intermediary force that act as the go-between with the policyholder. As you get more premium controlled by fewer intermediaries, I think this increases the potential to drive up prices for carriers,” said Jonathan Froelich, partner, KPMG Advisory.
“The second potential impact of such a merger would be in the broader commercial marketplace. The bread and butter business of a lot of the mega insurance brokers is in larger commercial risks for global businesses. If you take one of those brokers out of the marketplace by merging it with another, you’re potentially offering less choice to the large global corporations that really need partners with expertise and presence in the world markets – something that isn’t always offered by some of the smaller and medium-sized brokerages. That could potentially have multiple impacts on the broader commercial market.”