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

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Aon has announced the sale of $1.4 billion of US retirement related operations, which it says is a divestment intended to address certain questions raised by the U.S. Department of Justice over its merger combination with Willis Towers Watson (WTW).

Aon logoThe insurance and reinsurance broking giant said today it has signed definitive agreements to sell its U.S. retirement business to investor Aquiline Capital Partners and its Aon Retiree Health Exchange™ business to Alight, for a combined total gross consideration of $1.4 billion.

These divestments will “provide further momentum on path to close proposed combination with Willis Towers Watson,” Aon explained.

The sales of these retirement specific units of Aon’s global insurance, reinsurance and consulting operations are part of efforts to “address certain questions raised by the U.S. Department of Justice in relation to the combination,” with rival Willis Towers Watson. “With respect to the markets in which these businesses are active.”

Aon said that it and merger partner Willis Towers Watson “continue to work toward obtaining regulatory approval in all relevant jurisdictions.”

“These agreements further accelerate our momentum to close our proposed combination with Willis Towers Watson,” explained Greg Case, Aon’s CEO. “These are very capable teams that have demonstrated exceptional dedication to our clients and our firm. I want to recognize their contributions and reinforce that we are confident they will have similar opportunities with Aquiline and Alight.”

Aon explained on the divestment agreement with Aquiline:

The U.S. retirement business Aquiline will acquire includes approximately 1000 colleagues and the agreement includes U.S. core retirement consulting, U.S. pension administration and the U.S.-based portion of Aon’s international retirement consulting business, along with many solutions and tools, including:

  • Benefit Index and SpecSelect
  • Risk Analyzer
  • DBCalc and YPR
  • Aon Pooled Employer Plan (PEP)

The agreement with Aquiline does not include Aon’s non-U.S. actuarial, non-U.S. pension administration or international retirement businesses based outside of the U.S.

“The retirement solutions sector is benefitting from an increased focus on long-term investment security and risk management of plans,” Jeff Greenberg, Aquiline’s Chairman and CEO commented. “Aquiline’s significant experience across retirement and investments positions us to build on the strong business Aon has created. We look forward to working closely with the clients, management and colleagues of Aon’s U.S. retirement business to create further value for all stakeholders.”

On the sale of the retiree health exchange to tech-focused employee health and wellness company Alight:

The Aon Retiree Health Exchange™, which Alight will acquire, is an individual market solution that better supports employers and their retirees. It was the first retiree exchange to meet the National Council on Aging (NCOA) standards and continues to meet or exceed those rigorous standards of excellence in consumer education and health insurance brokerage services for people with Medicare.

Aon said that including previously announced divestments (the EC focused package including reinsurance broking unit Willis Re being sold to Gallagher, and the announced sale of its German pension business), the total 2020 revenue announced or offered to be sold, contingent on the combination with WTW being approved, has now reached $2.3 billion.

Aon said that of the $2.3 billion, roughly 35% occurred in Q1, 23% in Q2, 18% in Q3, and 24% in Q4.

As we explained earlier today, it’s reported that the US Department of Justice (DOJ) Antitrust Division may not challenge Aon’s acquisition of rival Willis Towers Watson (WTW), which, after the EC related divestment package, means additional disposals to remedy any DOJ concerns is perhaps now the most likely outcome.

This announcement is part of that process towards gaining approval from the US DOJ, a key step on the way to Aon gaining approval for and completing its acquisition of Willis Towers Watson.

Aon also said today that its merging with WTW is expected to deliver $800 million of cost synergies, taking into consideration the divestments announced so far and other potential remedies that may be required.

In addition, the company expects synergies to accretion to adjusted EPS remains consistent with previously announced projections, despite the divestments being made.

Also read:

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.

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