Spare a thought for those sheltering from the mega-merger fallout

Matt shares his thoughts on the insurance story of the week.

There’s been only one story in town this week. The mega-merger between broking giants Aon and Willis Towers Watson came unexpectedly to a shuddering halt. When the news broke on Monday, it sent waves of speculation and rumour through the market.

Concerns (depending on your point of view)  had been mounting for some time about the regulatory hurdles the deal was facing across multiple jurisdictions, but it was the US Department of Justice that was the immovable force that thwarted the unstoppable object.

When you throw a rock into a pond, the rock pushes the water away causing concentric waves and ripples to radiate from the point of impact. As the energy in the water molecules pushing away from the rock diminishes, so eventually do the ripples. Few believe the ripples caused by the rock thrown from the Department of Justice’s offices will dissipate any time soon.

Of course the ripple effect has been going on for some time, and those molecules have not so much been rippling, but getting up and walking out. As part of the deal, Willis Re was to be sold to AJ Gallagher. The move, to appease US regulators, must have been unsettling for many. Those men and women at Willis Re must surely be thinking what now, a deal that will have been sold to them by management is unlikely for now, but in the void of certainty, concern and confusion must reign.

One of the most eye-catching outcomes has been the $1bn paid by Aon to Willis – a break up fee designed to halt rounds of legal recrimination presumably. So surely the biggest ripples are to be felt by the few men and women whose brainchild this deal was and whose actions have cost a ten-figure sum? The CEO & CFO had their contracts extended by an additional 3 years. So, a little less concern and confusion there then.

As we near the end of the week, the insurance trade headlines are still dominated by the collapse of the deal. For those disaffected souls, Pat Gallagher is keen to let them know that his door is open. M&A is rarely a simple transaction, but I for one will be sparing a thought for the many, whose job security and careers have put into turmoil over the last week, and months.