When Aon and Willis Towers Watson recently announced a mega-merger of an all-stock transaction with an equity value of approximately $30 billion, the merger, among other things, continued an ongoing HR consulting-consolidation trend.
Expected to be finalized within first half of 2021 (post-regulatory approvals), the merger brings together two of the largest commercial insurance brokerages in the U.S. and Europe. About a year ago, talks regarding a potential marriage between Aon and WTW fell apart. The impact on the HR side of both company’s business is not clear yet, according to some HR experts.
Primarily, the new Aon will focus on the areas of risk, retirement and health, according to the merger announcement. Aon will maintain operating headquarters in London. Willis Towers Watson CEO John Haley will take on the role of executive chairman with a focus on growth and innovation strategy. The combined firm will be led by Aon CEO Greg Case and Aon Chief Financial Officer Christa Davies, along with a “highly experienced and proven leadership team that reflects the complementary strengths and capabilities of both organizations.”
Aon currently has 50,000 employees in 120 countries, while Willis Towers Watson has more than 45,000 employees and services clients spread across more than 140 countries.
In a conference call on March 9, Case said the combined firm “will accelerate innovation on behalf of clients and be better able to deliver more value to all stakeholders.
“And while we will be bigger, yes, that’s not what this transaction is about. This is about better,” Case added during the call.
Haley echoed Case’s comments, noting that the important point about the transaction is that it isn’t about being larger. “In fact, the most attractive part of this combination is the fact that we bring together some complementary capabilities,” Haley said, adding that the merger is “about getting better, and it’s about being better able to serve clients and leading to better outcomes for them.
“It’s more important that together we can build new things and deliver new value to clients,” Haley explained. “The whole premise about this merger is not about where we are today; it’s about where we can be in the future.”
“We will fundamentally be more innovative, more capable, more relevant and more responsive upon [the close of the deal],” Case also said during the teleconference. “We will combine diverse experience from our 95,000 colleagues and shared values from both of our organizations.”
According to Aon, the principal sources of potential synergies and other cost reductions are:
- 73% from the consolidation of business and central support functions, including leveraging the capabilities of the Aon Business Services operational platform across the combined group; and
- 27% from the consolidation of infrastructure related to technology, real estate and third-party contracts.
Reaction to the merger among HR analysts and experts was largely neutral; most weren’t shocked, considering what’s happened in the world of large HR consulting firms over past years.
“After speaking with them and reviewing the deal, it appears to be mostly a consolidation to create ‘synergies’ of $800 million and a very large insurance broker company focused heavily on new risks in areas like cyber, climate change, and pension and actuarial services,” says Josh Bersin, adding that the HR services will be merged and the outsourcing will move to Aon’s platform. “They’re clearly going after Mercer, but focused more on actuarial and insurance than on HR consulting. I see this as a financial move, and it will put some pressure on Mercer for actuarial and insurance.”
“I am amazed that Hewitt’s once world-beating outsourced BenAdmin business has been tossed around like a hot potato,” says Bill Kutik, HRE technology columnist and co-founder of the HR Technology Conference. “It’s finally ending up at Aon after being combined with Towers’ service. While once there were the Big Five, formerly known as ‘benefits consulting firms,’ now there is one aligned against Mercer.”
Jeanne Achille, chair of the upcoming Select HR Tech Conference, notes that the global insurance category is under intense pressure to accelerate innovation and improve operational efficiencies for HR professionals and the workforces they support.
“The merger between Aon and Willis Towers Watson will enable better digital support for mid-market companies, bridge gaps in high-growth markets and address the intensifying compliance requirements that keep HR up at night,” Achille says.
“We like to see partnerships that ultimately better the employee experience,” adds Scott Cawood, president and CEO of WorldatWork, the Total Rewards association. “WorldatWork has enjoyed a long, robust partnership with both Aon and Willis Towers Watson, and we are excited to continue that strong alliance with Aon as we work to enhance the experience and rewards of people across the globe.”