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Aon Plc Idea Proposal (AON, WLTW)

Jul 23 2020 Financial, Insurance
Aon Plc Idea Proposal (AON, WLTW)
 

Will Aon’s merger with Willis Towers Watson lead to significant disruptions with employees leaving and taking clients with them? Will Aon’s push for a more data driven model succeed?

Report Available: August 20, 2020

 

Blueshift’s initial research found the second and third largest insurance broker and investment consulting firms, AON and WLTW, announcing the largest M&A deal of 2020. When merged, the companies will be called Aon and valued at approximately $80 billion. The deal is expected to close in the first half of 2021 pending regulatory review. A deal of this magnitude has led to both positive and negative reactions from industry professionals regarding the potential for industry disruption. AON has said the deal is about getting better not bigger and meeting clients’ unmet needs. One important concern is the potential employee attrition this causes and how that will affect client relationships.

 

Observations

  1. On March 9, AON and WLTW announced their intentions to combine to accelerate innovation on behalf of clients. The merger anticipates savings of $267 million in the first full year of the combination, reaching $600 million in the second full year, with the full $800 million achieved in the third full year. Specifics regarding where the savings would come from were not provided.
  2. Reaction to the blockbuster merger announcement has been varied. A March 11 article noted that the merged broker will have increased leverage among its insurer partners, fears about a duopoly and its effect on its customers as service and innovation suffer, the reduction in choice, and whether this merger was necessary for the industry. A March 23 article said personnel and clients are likely to seek new opportunities. And a June 19 article was optimistic that the merger could represent a boon for innovation in the insurance industry.
  3. In an interview with Blueshift, a regional sales executive for a competitor to AON and WLTW said they are thrilled about the merger. It has resulted in chaos with some of AON’s and WLTW’s employees and more is anticipated as the companies attempt to integrate. The source’s firm has hired some AON professionals who left the company because of poor treatment during the COVID-19 pandemic and uncertainty associated with the merger. Customers are not yet reacting to the anticipated merger, but this source expects a lot of competitive opportunities as AON and WLTW combine programs, products, and services.

 

What does this merger mean for employees? How do brokers feel about this merger? How many of them will choose to leave? How will clients be affected by employee departures? How are clients feeling about the merger? How disruptive will the merger be on the industry? What will the disruption look like? Will customers consider other companies for their insurance and investment consulting needs? What effect will the merger have on AON’s push for a more data driven approach? Will AON’s approach take the new entity into the future? Will AON help WLTW grow faster? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Insurance broker senior managers, AON & WLTW customers, Competitors, and Industry specialists.  

 

Companies: Aon Plc (AON), Willis Towers Watson Plc (WLTW), Marsh & McLennan Companies Inc. (MMC), Chubb Ltd. (CB), American International Group (AIG), and Arthur J. Gallagher & Company (AJG)

 

Research Begins: August 3, 2020

 

To see other ideas Blueshift Research is currently working on, please click here.

 

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