Insurance brokers Aon and Willis Towers Watson divest from $30 billion merger

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An office building bearing the Aon logo amid the easing of coronavirus (COVID-19) restrictions in Sydney’s central business district, Australia, June 3, 2020. REUTERS/Lauren Elliott

July 26 (Reuters) – Insurance brokers Aon Plc (AON.N) and Willis Towers Watson Plc said on Monday they have agreed to end their $30 billion merger agreement and end litigation with the U.S. Department of Justice.

The deal would have put London-based Aon ahead of the world’s largest insurance broker Marsh & McLennan Cos Inc (MMC.N).

“Despite regulatory momentum around the world, including the recent approval of our merger by the European Commission, we have hit an impasse with the US Department of Justice,” Aon CEO Greg Case said in a statement.

She said Aon will pay $1 billion in termination fees to Willis.

In June, the Department of Justice (DOJ) filed a lawsuit to block the deal, saying it would reduce competition and could lead to higher prices. Read more

The Department of Justice argued that combining the two large insurance brokers would harm competition in reinsurance brokerage, retirement, pension planning, and multi-vector health exchanges for retirees.

A federal judge narrowed the scope of the lawsuit last week, which came after Onn and Willis agreed to divest investments to win approval in the United States and Europe after discussions with regulators.

The divestments included Aon’s US retirement unit, the US retiree’s healthcare disbursement business and Germany’s pension business. Willis Towers Watson’s global reinsurance business is also included. EU antitrust regulators agreed to the merger earlier this month on the condition of some sales. Read more

Aon ranks second and fifth among US commercial insurance brokers in the US market, according to a survey by Business Insurance magazine.

The other largest brokers in the United States are Marsh & McLennan, Arthur J Gallagher & Co (AJG.N), and Alliant Insurance Services Inc.

In April, insurer Chubb Ltd (CB.BN) said it was no longer looking to buy out a smaller competitor, Hartford Financial Services Group Inc (HIG.N), after the latter rejected Chubb’s takeover bids after refusing to participate in talks for 23.24 billion dollar takeover bid.

Aon shares are up 4% to $242, while Willis Tower shares are down 3.5% to $218 in pre-market trading.

Additional reporting by Sohini Boder and Nikit Nishant in Bengaluru; Edited by Sumyadb Chakrabarti and Sriraj Kalovila

Our Standards: Thomson Reuters Trust Principles.

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