US authorities are seeking to block Aon’s acquisition of insurance broking rival Willis Towers Watson — both of which have large marine portfolios — over fears about competition.
The US Justice Department on Wednesday filed a civil antitrust lawsuit to block the $30bn proposed consolidation of what it described as two of the "big three" global insurance brokers.
As alleged in the complaint filed in the US District Court for the District of Columbia, the merger threatens to “eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services”.
“Today’s action demonstrates the Justice Department’s commitment to stopping harmful consolidation and preserving competition that directly and indirectly benefits Americans across the country,” US attorney general Merrick B Garland said.
'Fewer choices'
“Allowing Aon and Willis Towers Watson to merge would reduce that vital competition and leave American customers with fewer choices, higher prices and lower quality services.”
The US Justice Department’s lawsuit made no reference to the implications for the maritime sector, with its main concern being the impact any merger would have on the health and retirement benefits of millions of US citizens.
In March last year, Aon agreed to buy Willis Towers Watson in a deal that was likely to have significant ramifications in the marine insurance market.
A combined entity would create a market leader that would leapfrog Marsh & McLennan, which last year paid $5.7bn for Jardine Lloyd Thompson.
Aon’s global marine team places more than $3bn in marine insurance premiums annually, while Willis Towers Watson has a team of more than 600 marine specialists worldwide. Both are major players in hull, cargo and protection and indemnity insurance broking.
The merged company, which would have 95,000 staff and annual revenue of over $20bn, would operate under the Aon brand and maintain its operating headquarters in London with the parent company based in Dublin.
Both companies’ global marine chief executives — Lee Meyrick for Aon and Ben Abraham for Willis Towers Watson — are based in London.
Willis Towers Watson says it has the largest dedicated P&I broking team in London, handling over 700 separate entries with a premium volume of over $500m per year.
In a joint statement, Aon and Willis Towers Watson said they disagreed with the US Department of Justice's action, which they said "reflects a lack of understanding of our business, the clients we serve and the marketplaces in which we operate".
'More choice' claim
The two insurers argued that the proposed combination would actually "create more choice" in an already dynamic and competitive marketplace.
"While this proposed combination was not developed with the pandemic in mind, the impact of the pandemic underscores the need to address similar systemic risks including cyber threats, climate change and the growing health and wealth gap which our combined firm will more capably address," they said.
Aon and Willis Towers Watson said they "continue to make material progress with other regulators around the world" and remain "fully committed to the benefits of our combination".
