Jardine Lloyd Thompson Group plc to acquire Towers Watson’s reinsurance brokerage business
19 September 2013
London: Jardine Lloyd Thompson Group plc (“JLT”) one of the world’s largest suppliers of insurance and employee benefits related advice, brokerage and associated services, and Towers Watson, a global professional services company (NYSE. NASDAQ:TW), have today announced that JLT will acquire the reinsurance brokerage business of Towers Watson for a cash consideration of US$250m (£156m).
Upon completion, Towers Watson’s reinsurance brokerage business will be merged with JLT’s reinsurance business, JLT Re, to create a new force in the international reinsurance market, with combined revenues of US$266mi (£166m) and 700 people in 35 locations in 17 countries. The combined business will be branded for a transitional period as JLT Towers Re.
Towers Watson’s reinsurance brokerage business is one of the most respected in the market, generating revenues of US$166mii (£104m) and profit before tax of US$26mii (£16m) in the year ended June 2013, making it the 4thlargest reinsurance broker in the world. This acquisition significantly accelerates JLT’s existing strategy to build out its international reinsurance brokerage operations. It combines Towers Watson’s well-established North American and London Market reinsurance businesses with JLT Re’s international reinsurance operations, dynamic brand and strong London Market operation. The combined business will benefit from considerably enhanced scale, capability and market presence.
As part of the transaction, JLT Re and Towers Watson have entered into an Alliance Agreement that will ensure clients have continued access to Towers Watson’s risk consulting and software services. This Agreement will also provide JLT Towers Re with continued use of Towers Watson’s proprietary actuarial models and software, alongside deep analytical and modelling capabilities that will be acquired with the business.
Upon formal completion of the transaction, Ross Howard, who is currently head of Towers Watson’s reinsurance brokerage business, will become Executive Chairman of the merged operation. Alastair Speare-Cole, currently CEO of JLT Re, will become CEO of the enlarged business. Alan Griffin will step down as Chairman of JLT Re, but will retain a board and advisory role.
The acquisition is subject to regulatory approvals and is expected to complete before the year end. The two businesses will be fully integrated over the course of 2014 and 2015.
Total transaction and integration costs are expected to be approximately US$7m (£4m) and US$20m (£12m) respectively. The acquisition will be made on a debt and cash free basis and financed from JLT’s cash resources and debt and is expected to be earnings accretive in the first full year following completion. The gross assets being acquired amount to approximately US$106mii (£66m).
Commenting on the transaction, Alastair Speare-Cole, said: "We have long admired Towers Watson as one of the best reinsurance brokers in the world. Towers Watson is known in the industry as a fierce advocate for its clients with deep specialist and analytical expertise.”
Ross Howard, said: "JLT offers our clients and our people a great opportunity to work with a company that shares our values and focus on clients. Together we will have the platform, market presence and support of a strong organisation to attract and retain the very best people in the market and improve our client offering."
Tricia Guinn, head of Towers Watson’s Risk and Financial Services business segment said: “We are delighted to agree a deal with JLT that offers our clients and our people a clear and exciting future. We look forward to collaborating with JLT Towers Re through our new Alliance Agreement. We are excited by the opportunity to expand our core risk consulting and software business around the world, working in partnership with their local operations.”
Dominic Burke, Group Chief Executive of JLT said: “I am delighted to be able to welcome the Towers Watson team and their clients to JLT. Towers Watson offers us a very strong reinsurance platform in the key North American market, as well as bringing further strength in the London Market and a leading analytical capability.”
“We see a significant strategic opportunity through the merger of the two businesses to create a formidable new force and restore client choice to the reinsurance market. We are committed to investing in the business to enhance our client proposition and drive growth, as we have successfully done across the rest of the JLT Group in recent years.”
i. The combined revenues of $266m represents the combined unaudited revenues of Towers Watson’s reinsurance brokerage business of $166.2m (£103.9m) for the twelve months ended 30 June 2013, and JLT Re of $99.3m (£62.m) for the 12 months ended 30 June 2013.
ii. Based on unaudited management financial information of Towers Watson’s reinsurance brokerage business for the twelve months ended 30 June 2013
Dominic Burke, Group CEO, +44 20 7309 8145
Mike Reynolds, Group Finance Director, +44 20 7528 4375
Paul Dransfield, Head of Group Corporate Communications, +44 20 7528 4935
Josh Wozman, Director, Public Relations, Americas, + 703 258 7670, + 703 585 2718 (Mobile)
Graham Whitehead, Manager, Public Relations, EMEA, +44 737 274540, +44 7827 953969 (Mobile)
Tom Burns/ Dania Saidam (UK), +44 20 7404 5959
Notes to Editors
About Jardine Lloyd Thompson Group plc
Jardine Lloyd Thompson Group plc (JLT) is an international group of risk specialists and employee benefits consultants and one of the largest companies of its type in the world. JLT offers a distinctive choice to clients and partners through our combination of independence, scale and specialism.
JLT is quoted on the London Stock Exchange and employs over 8,500 people worldwide and through the JLT International Network provides services in more than 135 countries.
This announcement may contain "forward looking statements" regarding the financial position, business strategy or plans for future operations of the group. By their nature, forward looking statements involve risk and uncertainty, relating to facts that are beyond the company's ability to control, such as future market conditions. Any such statements in this announcement speak only as at the date of this announcement. The company does not assume any obligation to, and does not intend to, revise or update these forward looking statements except as required pursuant to applicable law.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the web at towerswatson.com
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements and other forward-looking statements in this document by words such as “may”, “will”, “would”, “expect”, “anticipate”, “believe”, “estimate”, “plan”, “intend”, “continue”, or similar words, expressions or the negative of such terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of Towers Watson's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: a decline in client demand (for example, resulting from the reduced use of defined benefit plans); the risk of a disclosure breach of company or client data; the ability to successfully make suitable acquisitions and divestitures; the ability to successfully address issues surrounding the number of company shares that will become freely tradable on January 1, 2014; the risk that potential changes in federal and state health care regulations, or future interpretation of existing regulations, may have a material adverse impact on our business; the risk that changes and developments in the health insurance system in the United States could harm our business; our ability to respond to rapid technological changes; the ability to recruit and retain qualified employees and to retain client relationships; and the risk that a significant or prolonged economic downturn could have a material adverse effect on Towers Watson's business, financial condition and results of operations. Additional risks and factors are identified under “Risk Factors” in Towers Watson’s most recent Annual Report on Form 10-K filed with the SEC.
You should not rely upon forward-looking statements as predictions of future events because these statements are based on assumptions that may not come true and are speculative by their nature. Towers Watson does not undertake an obligation to update any of the forward-looking information included in this document, whether as a result of new information, future events, changed expectations or otherwise.
Head of Communications & Marketing, JLT Re