Aon resets executive team after WTW deal collapse

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Broker Aon has reset its Executive Committee following the collapse of its acquisition of rival insurance and reinsurance broker Willis Towers Watson (WTW).

Aon logoAon said its new Executive Committee structure is a further acceleration of its Aon United strategy, following its recent decision to end the Willis Towers Watson (WTW) combination efforts.

The new Aon Executive Committee (AEC) will be responsible for executing the broker’s Aon United Blueprint, which is designed to create new sources of value for clients, deliver more effective client service, drive innovation at scale and ensure a unique and sustaining colleague experience, the company said.

“Our Aon United operating model has been further strengthened through the combination planning process and we’re moving forward at speed without the overhang of regulatory uncertainty or distraction of restructuring,” Aon CEO Greg Case explained. “Our new Executive Committee is an incredibly capable team of leaders with a clear perspective on what it will take to reach the full potential of Aon United.

“This team knows how to work together across geographies, solution lines and functions to bring the best of our firm to clients and is fully committed to accelerating innovation to better address unmet client need.”

The Aon Executive Committee is split across four solution lines of business, five regions and five shared service functions, as you can see in the diagram below:

Aon executive team organisation chart

The four solution lines sitting underneath Aon President Eric Andersen are: Commercial Risk Solutions, Health Solutions, Reinsurance Solutions and Wealth Solutions.

The company says that these “Global solution lines will play a critical role in understanding macro client trends and producing new solutions that address their unmet needs.”

However, it seems Aon Securities and its insurance-linked securities (ILS), or capital market focused, activities continue to sit under Reinsurance Solutions.

Which could perhaps be considered a missed opportunity to elevate this function to a level where it can input more broadly to risk transfer and management across both Aon’s commercial risk clients and its reinsurance clients.

We’ve said a number of times over the years that forward-thinking brokers may in time move to lift capital markets and ILS functions up to a level in their businesses where a single centre of excellence can provide support across both insurance and reinsurance business lines.

So it is a shame not to see Aon’s capital market and ILS activities getting higher billing in this re-org, especially since this is a true opportunity for providing greater client utility and innovation, particularly in addressing the unmet needs the broker mentions.

Of course ILS is still a far smaller revenue line for Aon than its insurance or reinsurance broking business.

But, as a function that provides significant client value, innovation and can create new solutions for any risk transfer opportunity along the risk-to-capital market chain, it might provide a more capital market integrated approach if it sat higher up in the organisational structure.

The Exec Committee chart also includes four regions: North America, Latin America, the United Kingdom, EMEA and APAC.

Aon said the “regions serve as the distribution arm of the Aon United operating model and are responsible for delivering one-firm capabilities to clients every day.”

But should a regional broker want to access the capital markets as a source of capacity for her or his corporate clients, they might need to refer down through the Reinsurance Solutions org chart to find the right people for the job.

There is still an issue in the global insurance and reinsurance broking industry, that clients can struggle to gain exposure to the full range of risk transfer options and forms of capital available to them.

We speak to protection buyers regularly who want to understand how to access ILS markets, but that aren’t given clear information by their brokers, or find it hard to get engaged in capital market opportunities due to differences in priorities between regional brokers and centralised capital market teams.

Of course, this is a function of ILS still being new to so many protection buyers and education continuing to be required.

But it’s also something that org structures have not responded to and there often remain incentives to keep the placement volume as high as possible at the reinsurance broker level and not to carve some of that placement out to the capital markets via a centralised team.

It’s important to clarify that it is unfair to level this at Aon alone.

Especially as Aon has a particularly active capital market unit (in Aon Securities), with a significant market share in ILS structures, especially catastrophe bonds, as our leaderboard shows.

But it is worth considering how capital market and ILS-focused functions may sit in a global insurance and reinsurance broking operation in future, as the importance of ILS-style risk transfer continues to grow and as ceding clients continue to look for a growing range of solutions to access third-party capital and capital market investors.

Interestingly, Aon has also broken out new top-level exec functions for Enterprise Clients and International Business, two areas where again the capital markets are important and growing options for risk transfer.

It’s easy to see how the capital market and ILS capabilities are applicable to many of these top-level exec areas of the Aon business and we’d expect the Aon Securities team to be busy serving across all client-focused areas of the business.

Perhaps, in years to come, we’ll get to see more deeply into the org structure how the capital markets are set to be brought to the wider Aon client-base.

Many companies around the globe, in a huge range of industries, are moving away from top-down hierarchies to use new organisational structures based on modern theories of working, to try and expose the central functions that can add significant value to a broad, multi-vertical and regional global client-base.

We’d imagine the insurance and reinsurance broking world will also move in this direction in time, with areas such as capital markets, ILS and also technology, data, modelling and risk or insurance management services, more prominently positioned in their org charts. Or at the least, more clearly labelled and linked to show how these expert areas of the business fit in.

For now, this reset announced today seems designed to provide client confidence in the wake of the collapse of the Willis Towers Watson merger, as Aon positions itself to continue delivering value.

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