Arthur J. Gallagher & Co. would be "best suited" for Willis Re if regulators force the sale of reinsurance brokerage as a condition of approving the major acquisition of Willis Towers Watson PLC by rival Aon PLC, analysts at Keefe Bruyette & Woods Inc. said in an investor note Monday.
The New York-based investment bank noted that while Aon's management says it expects to buy the entire Willis, European regulators are investigating the deal, which is scheduled to be completed in the first half of this year, due to concerns about antitrust.
In announcing the probe, the European Commission cited several sectors where there may be concerns about reduced competition, including reinsurance, space and space, and certain benefits related services. Since the $ 30 billion deal was announced in March last year, analysts have speculated that the combination of brokerage firms' reinsurance units could give rise to competition concerns among regulators.
If a sale of Willis Re is required, Gallagher has already achieved a successful rebuild. entry into the reinsurance brokerage sector via a joint venture in 201
“If (Gallagher) buys Willis Re, we think it could very effectively compete with Aon and (Marsh & McLennan Cos. Inc .: s) Guy Carpenter in reinsurance brokerage, while strengthening his relationships with – and understanding
But several other brokerage firms with private or private capital are also potential acquirers of Willis Re, analysts said.
Gallagher, which is the world's insurance company, is one of many insurance companies it currently provides primary insurance brokerage. fourth largest insurance broker and has grown its international business in recent years was also a buyer of Jardine Lloyd Thompson Group PLC's aerospace industry when that business was sold to secure approval of Marsh & McLennan for the 2019 acquisition of JLT.
Aon and Willis is the second and third largest insurance broker and the combination of business would potentially do the same before taken to the largest brokerage firm before rival Marsh & McLennan.
Aon is already the largest reinsurance broker with $ 1.66 billion in gross revenue for 2019 and Willis is the third largest, with $ 1.02 billion in revenue, after Marsh & McLennan's Guy Carpenter Co. LLC, with $ 1.48 billion, according to Business Insurance latest ranking.
All three dwarf their closest reinsurance brokers, including No. 4 TigerRisk Partners LLC, with $ 125 million in revenue, and No. 5 Gallagher Re, with $ 100 million.
Gallagher and Aon declined to comment on the KBW report.