JLT to Acquire Towers Watson Reinsurance Brokerage Unit, Expand Into U.S.

September 20, 2013

UK-based broker Jardine Lloyd Thompson Group plc (JLT) said it is acquiring the reinsurance brokerage business of New York-based Towers Watson for $250 million.

JLT said the acquisition would provide “a very strong reinsurance platform” in the key North American market and bring further strength in the London Market and in the analytical capability.

Upon completion, Towers Watson’s reinsurance brokerage business will be merged with JLT’s reinsurance business, JLT Re. 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, according to the two firms’ announcement.

The combined reinsurance business would have total revenues of $266 million and 700 employees in 35 locations in 17 countries. The combined business will be branded for a transitional period as JLT Towers Re.

Towers Watson’s reinsurance brokerage business generated revenues of $166 million and pre-tax profit of $26 million in the year ended June 2013, making it the 4th largest reinsurance broker in the world, according to the announcement.

JLT said this acquisition significantly accelerates JLT’s existing strategy to build out its international reinsurance brokerage operations. The brokerage said the deal combines Towers Watson’s well-established North American and London Market reinsurance businesses with JLT Re’s international reinsurance operations, dynamic brand and strong London Market operation. JLT said the combined business will benefit from considerably enhanced scale, capability and market presence.

As part of the transaction, JLT Re and Towers Watson have entered into an “Alliance Agreement” that will 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 deep analytical and modeling capabilities that will be acquired with the business, according to the announcement.

Upon formal completion of the transaction, 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.

“I am delighted to be able to welcome the Towers Watson team and their clients to JLT,” Dominic Burke, group chief executive of JLT, said. “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,” Burke said.

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