JLT acquires Towers Watson’s reinsurance brokerage, creates JLT Towers Re

by Artemis on September 20, 2013

Not strictly on topic for Artemis, but a major breaking story in the reinsurance market, is the news that Jardine Lloyd Thompson Group plc (JLT) will be the firm to acquire the Towers Watson reinsurance brokerage business for a cash consideration of $250m.

Once the acquisition is completed, Towers Watson’s reinsurance brokerage will be merged with JLT’s reinsurance brokerage business, creating the newly named JLT Towers Re with combined revenues of US$266m (£166m) and 700 people in 35 locations in 17 countries.

As part of the deal, JLT Re and Towers Watson have entered into an Alliance Agreement to ensure clients have continued access to Towers Watson’s risk consulting and software services. This Agreement will also provide JLT Towers Re with continued use of Towers Watson’s proprietary actuarial models and software, alongside analytical and modelling capabilities that will be acquired with the business.

Ross Howard, who is currently head of Towers Watson’s reinsurance brokerage business, will become Executive Chairman of the merged operation.  Alastair Speare-Cole, currently CEO of JLT Re, will become CEO of the enlarged business.  Alan Griffin will step down as Chairman of JLT Re, but will retain a board and advisory role.

The acquisition is subject to regulatory approvals and is expected to complete before the year end. The two businesses will be fully integrated over the course of 2014 and 2015.

Commenting on the transaction, Alastair Speare-Cole, said; “We have long admired Towers Watson as one of the best reinsurance brokers in the world.  Towers Watson is known in the industry as a fierce advocate for its clients with deep specialist and analytical expertise.”

Ross Howard, commented; “JLT offers our clients and our people a great opportunity to work with a company that shares our values and focus on clients.  Together we will have the platform, market presence and support of a strong organisation to attract and retain the very best people in the market and improve our client offering.”

Tricia Guinn, head of Towers Watson’s Risk and Financial Services business segment added; “We are delighted to agree to a deal with JLT that offers our clients and our people a clear and exciting future.  We look forward to collaborating with JLT Towers Re through our new Alliance Agreement.  We are excited by the opportunity to expand our core risk consulting and software business around the world, working in partnership with their local operations.”

Dominic Burke, Group Chief Executive of JLT commented; “I am delighted to be able to welcome the Towers Watson team and their clients to JLT.  Towers Watson offers us a very strong reinsurance platform in the key North American market, as well as bringing further strength in the London Market and a leading analytical capability.”

“We see a significant strategic opportunity through the merger of the two businesses to create a formidable new force and restore client choice to the reinsurance market.   We are committed to investing in the business to enhance our client proposition and drive growth, as we have successfully done across the rest of the JLT Group in recent years.”

The deal involves the combining of Towers Watson’s well-established North American and London Market reinsurance businesses with JLT Re’s international reinsurance operations and strong London Market operation, under the new combined brand.

For the reinsuranc market it is good to see these two firms combined, rather than Towers Watson’s reinsurance brokerage go to one of the established big three brokers. More choice is always a good thing and both JLT Re and the Towers Watson reinsurance brokers have impressive records, strong specialisms and have always had a focus on providing collateralized solutions to clients as well.

Both firms have provided industry-loss warranty solutions to clients across a range of risks and perils and worked with fully-collateralized sources of capacity. The merged, larger entity will be able to bring its client focused, capacity agnostic solutions to clients at greater scale and it should make them a much more competitive entity against the larger reinsurance brokers.

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