Swiss Re Insurance-Linked Fund Management

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Gallagher’s WTW acquisitions to include ILS specialist Willis Re Securities


The pending acquisition of the majority of reinsurance broking unit Willis Re by Arthur J. Gallagher & Co. (Gallagher) will include insurance-linked securities (ILS) and capital market specialist unit Willis Re Securities.

gallagher-willis-re-securitiesIt was announced today that Gallagher has agreed to acquire a $3.57 billion package of assets from Willis Towers Watson (WTW), which is a remedy divestment designed to resolve questions from regulators at the European Commission and other jurisdictions, to smooth passage for Aon’s acquisition of rival WTW in its pending $30 billion deal.

The purchase will see Gallagher acquiring reinsurance broking unit Willis Re’s operations globally, excluding mainland China and Hong Kong, a move that will propel the firms Gallagher Re to become a much larger reinsurance broker, with significantly expanded operations, revenues and expertise.

We’ve now had it confirmed that this acquisition will see Gallagher acquiring a significant insurance-linked securities (ILS) focused interest, as the pending deal will include on completion the Willis Re Securities unit US and UK operations, a company spokesperson confirmed for us.

Gallagher’s specialist reinsurance broking unit Gallagher Re already includes broking teams with expertise in placing reinsurance and retrocession business with ILS fund markets and trading in collateralized structures.

But the Willis Re Securities team includes expertise in structuring and bookrunning catastrophe bonds, as well as in reinsurance sidecar arrangements and other capital market instruments and transactions, so the acquisition has the potential to greatly expand Gallagher’s activities in the space.

The Willis Re Securities unit provides advice and expertise to insurance and reinsurance industry participants on capital markets related product offerings.

As a registered broker dealer, these product offerings include catastrophe bonds and other ILS securities, as well as derivatives structuring and issuance, capital raising activities and advisory related to mergers and acquisitions (M&A).

Willis Re Securities also has its own private catastrophe bond platform, through which sponsors can access groups of ILS investors for reinsurance or retro capacity through securitised transactions.

On the catastrophe bond side of the marketplace, which is easier to track, we currently have the Willis Re Securities team listed in our leaderboard as sole structuring agent or bookrunner on 11 outstanding transactions, while playing a joint role on another 2 deals, representing outstanding catastrophe bond issuance amounting to roughly $2.23 billion of limit.

The acquisition of this team has the potential to provide Gallagher with an important position in the ILS market, with an established expert team and broad ILS sponsor and investor contacts.

The Willis Re Securities team works closely with the Willis Re broking units to offer clients access to capital market risk transfer solutions, securitisation and other alternative capital related options for their placements.

Willis Re Securities’ operations consist of Willis Securities, Inc., a licensed and FINRA regulated US broker dealer;, Willis Re Securities Europe Limited which is regulated by the UK Financial Conduct Authority; and Willis Re Securities (Hong Kong) Limited. It seems the Hong Kong business won’t be transferred to Gallagher in this deal as the Willis Re operations in mainland China and Hong Kong are not included in the divestment package.

Overall, the acquisition of Willis Re will provide Gallagher with a significantly expanded global reinsurance footprint.

This will include an expansion of the firms UK and US reinsurance operation and also provide additional scale in key markets within North America, Europe and Asia, in particular Canada, France, Germany, Japan, Malaysia, Singapore and Australia.

In addition, acquiring Willis Re will also give Gallagher Re new, or enlarged existing, international reinsurance presence in countries including Indonesia, Turkey, UAE, Brazil, Argentina, Peru, Mexico, Colombia and Chile.

Also read:

WTW assets to expand Gallagher reinsurance value proposition: CEO.

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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