Aon offers to sell more WTW interests to appease New Zealand regulator

Insurance and reinsurance broking giant Aon has proposed to divest further units, assets and also clients of its acquisition target Willis Towers Watson (WTW) to the New Zealand Commerce Commission.

The package of divestments proposed include some of the previously announced global divestments, such as reinsurance unit Willis Re, as well as some more specific to New Zealand’s marketplace.

As with many other divestitures that have come to light in the merger antitrust and competition process, there is a significant focus on corporate or commercial risk broking for large clients, as well as reinsurance.

As a reminder, the New Zealand Commerce Commission was one of the first to make its objections to the merging of Aon and Willis Towers Watson (WTW) public, to which the broking giants responded by making a defence of their merger plans, while also citing alternative reinsurance capital, disintermediation by the big four and marketplaces such as Tremor, as threats to their own combined business.

Initially, the NZ Commission had set a decision date of May 25th, to deliver on opinion on the acquisition of WTW by Aon.

But it failed to reach a decision on whether to approve the deal, so the date was first pushed back to July 2nd, and then subsequently pushed back again to August 20th.

The publication of the divestment proposal made, is the latest update from the regulator in NZ, which is now “assessing whether the Proposed Undertaking resolves its preliminary competition concerns such that the Proposed Acquisition would not be likely to substantially lessen competition in any relevant market.”

The proposed package of divestments, includes an undertaking by Aon to sell off certain parts of WTW’s business, both overseas and in New Zealand, to Arthur J Gallagher (Gallagher). Gallagher operates as Crombie Lockwood (NZ) Limited (Crombie Lockwood) in New Zealand.

These include, the sale of Willis Re as part of the global divestments already announced, a range of global corporate risk broking units of WTW, the majority of which have already been announced it seems, plus also a New Zealand specific corporate risk broking divestiture package.

The New Zealand specific package is particularly interesting, as it does seem to be the first offer by Aon to divest clients, rather than a specific unit or team.

This includes a commitment to divest WTW’s largest corporate risk broking (CRB) clients serviced out of New Zealand, which would amount to two thirds of the gross written premium placed by WTW’s New Zealand CRB business.

In addition, the agreement would also see various tangible and intangible assets related to the CRB unit also divested, to the extent that these are required by Gallagher/Crombie Lockwood.

Presumably that is assets that allow for the seamless transition and servicing of divested customers to continue under the Gallagher mantle, as well as broking capability and other related expertise associated with servicing them on an ongoing basis.

All of which adds to the overall level of divestments now required to be made for the Aon and Willis Towers Watson merger to achieve completion.

In the grand scheme of the acquisition, these additional New Zealand specific divestments are likely relatively small, compared to the benefits of Aon completing its acquisition of WTW.

But they do add to the value that needs to be shed.

As we reported last week, the European Commission has now approved the merger, on condition that divestments are made.

Which leaves the most significant stumbling block in Aon’s path to acquire Willis Towers Watson as the US Department of Justice’s timeline for an antitrust trial on the merger, which remains set for later this year, but beyond what was considered the outside date to complete the deal.

Also read:

– EC clears Aon’s acquisition of Willis Towers Watson with conditions.

– Aon – Willis offered earlier US trial, but still past merger outside date.

– Failure of WTW merger over US DoJ trial date “unacceptable” – Aon.

– South Africa adds to Aon Willis merger divestiture load.

– Aon – Willis Towers Watson merger review by Singapore to deepen.

– Aon & WTW “surprised” by DoJ lawsuit. Gallagher ready to snap up divestitures.

– Divestitures more likely than Aon abandoning Willis deal: Analysts.

– US DOJ sues, says Aon Willis would be “broking behemoth”, parties disagree.

– Aon selling $1.4bn of US retirement units to address US DOJ merger questions.

– US DOJ may not challenge Aon / Willis Towers Watson merger: Report.

– Aon / WTW: Willis Re sale supported, as industry wants broker choice.

– Aon sells German pensions business to LCP, as further step towards WTW merger.

– Aon & WTW agree $3.57bn sale of assets to Gallagher, including Willis Re.

– Gallagher likely buyer of $3bn Aon – Willis (WTW) divestments: Report.

– Aon expected to get conditional WTW acquisition approval from EC: Reuters.

– EC asks for feedback on sale of Aon / WTW assets, as MMC gains talent.

– Aon in proactive offer to US DOJ on Willis Towers Watson merger: Report.

– Aon – Willis Towers Watson divestiture reports expand to US & Bermuda.

– EC extends Aon – Willis Towers Watson merger deadline again.

– Aon – Willis Towers Watson merger deadline pushed back by EC.

– Aon – Willis Towers Watson merger assessed by Singapore competition authority.

– Aon & Willis Towers Watson merger may face EC statement of objection: Reuters.

– Aon & Willis Towers Watson merger to “significantly lessen competition”.

– Aon & WTW cite alt. capital, disintermediation & marketplaces in defence of merger.

– Aon & Willis Towers Watson reveal leadership of combined company.

– Willis Re divestment seen necessary for Aon – WTW merger to complete.

– If Aon / WTW leads to divestitures, AJG seen as “best fit” for Willis Re: KBW.

– EC investigates Aon / WTW deal, cites competition “concerns”.

– Aon + WTW to “extend proven model of catastrophe bonds” – CEO’s Case & Haley.

– Aon & Willis Towers Watson to merge.