The global Covid-19 pandemic and the subsequent economic shockwaves being felt by the (re)insurance industry and clients alike, is only serving to reinforce the logic of combining Aon and Willis Towers Watson (WTW) to create the industry’s preeminent global professional services firm, the CEOs of both firms have told The Insurer.
In an exclusive joint interview with this publication, Greg Case and John Haley spoke of how the spread of coronavirus had shone a spotlight on the large number of client needs that are currently not being addressed, with the merging of Aon and WTW offering the opportunity to better serve them.
”If you think about Covid-19 and the shortcomings it has highlighted in the way our clients deal with all manner of risk and contingencies, this just strengthens the case for the combination”
They also repeat their confidence over the deal sticking to its H1 2021 timetable despite the challenges caused by the virus which include remote working for the majority of its staff and also global regulators who have to approve the transaction ahead of closure.
“If you think about Covid-19 and the shortcomings it has highlighted in the way our clients deal with all manner of risk and contingencies, this just strengthens the case for the combination,” Haley said.
Case echoed this: “From Aon’s standpoint, we’ve been on a mission for the last decade to evolve our capabilities so that we can serve clients more effectively,” Case continued.
“This combination will further ensure that mission.”
“The bigger picture and ideas around Aon and Willis coming together having never been more relevant”
The pair stressed that that the proposed merger of Aon and WTW is driven by a need to better respond to unmet clients’ needs rather than scale alone, with “the bigger picture and ideas around Aon and Willis coming together having never been more relevant”, Case explained.
Haley added: “If you think about why we are bringing the two firms together, it’s not about getting bigger, it’s about getting better.”
The largest M&A transaction in broking history was announced two months ago, shortly before governments the world over ordered harsh lock-down measures to minimise the spread of Covid-19.
These measures sent the markets into a vicious tail-spin and despite an April recovery, investors remain nervous about the impact on the global economy in the second quarter and beyond.
Case and Haley both stress the all-stock nature of the transaction ring-fences the deal from financing pressures if there is another market rout.
“Because the combination is an all-stock transaction, market volatility will not slow down or impact our ability to close in any way, shape or form,” Case explained.
Since the transaction was announced both firms have unveiled tough cost-cutting measures which even included a temporary salary reduction for the majority of Aon’s 50,000 staff (at the same time, a commitment not to make any job losses through Covid-19).
Bearing this in mind, would the deal have occurred if the two firms knew what devastation the pandemic was about to wreak?
Yes, is their uniform response.“For both Aon and for Willis, this was not a deal that we had to do but a deal that we wanted to do.”
“The logic of our combination has only been reinforced [by Covid-19] and the financial volatility out there does not impede us – which is very unique”
“Both sides could see the vision of the transaction and what we can build here and that’s one of the reasons we set it up as an all-stock deal,” Haley explains.
“The logic of our combination has only been reinforced [by Covid-19] and the financial volatility out there does not impede us – which is very unique,” Case adds..
But while Haley said the all-stock transaction meant there were fewer “distractions to getting the deal done”, he acknowledged the destructive impact of the pandemic on the global economy and the pressure on financial regulators’ resources as a consequence may eventually slow down decision making.
However, he added that the long time-line envisaged for the deal completion – H1 2021 – provides significant head room for completion.
“I do think that the market may be a little slower dealing with regulatory and other considerations, but we currently think any delay will only be at the margin”.
”Greg and I get along well on many different levels, including the fact we both recognise how impatient we are to get this deal done”
Case adds while Covid-19 had made travel and face-to-face meetings with regulators impossible, both firms had been interacting virtually with regulatory bodies across the globe, with timetables on the same track as if meetings were being held in person.
“We are excited about the potential we have together and want to get there as soon as we can,” Case said. “We’re excited and committed to getting this done as quickly as possible.”
Haley added: “Greg and I get along well on many different levels, including the fact we both recognise how impatient we are to get this deal done.”