Gallagher To Acquire Willis Towers Watson Reinsurance Business

Willis Towers Watson (WTW) and Arthur J. Gallagher have reached an agreement for Gallagher to purchase Willis Towers Watson's treaty reinsurance brokerage operations.

Under the agreement, Gallagher will acquire the Willis Re operations for a $3.25 billion upfront cash consideration plus an additional consideration of $750 million, subject to certain third-year revenue targets. The transaction is subject to regulatory approvals.

In a statement, Gallagher said that it would finance the transaction with cash on hand. Integration of the Willis Re acquisition is expected to take 3 years, with total nonrecurring integration costs estimated at $250 million. The transaction is expected to close during this year's fourth quarter, according to the Gallagher statement.

"Following the termination of the proposed combination with Aon, we have been taking time to reflect on what we have learned about WTW over the last 16 months and determine how we will move forward as an independent company," John Haley, CEO of Willis Towers Watson, said in a statement. "As part of this, we conducted a review of strategic alternatives for Willis Re, our global reinsurance business. While we highly value Willis Re and our colleagues who contribute to its success, we concluded that divestment was the appropriate path for this business and for WTW."