Case & Haley: Covid-19 further validates Aon-WTW deal logic

In an exclusive wide-ranging interview with The Insurer, Greg Case and John Haley, chief executives of Aon and Willis Towers Watson (WTW) respectively, discuss the significance of the Aon-WTW deal in the wake of the global pandemic, while sharing their thoughts on the future of the industry.

It wasn’t long after the all-share deal between the two broking and risk consulting goliaths was announced that Covid-19 quickly demonstrated the disastrous impact it would have on the world economy, businesses and lives of people. 

At this stage, it would be fair to assume the coming together of the two firms could face many additional hurdles on top of the usual ones deals of this magnitude would typically have to handle, such as, regulatory scrutiny, talent leakage and cultural divides.

But Case and Haley are unphased and remain confident the deal will close by the end of H1 2021, as initially anticipated. 

While acknowledging the potential delay the volatility caused by Covid-19 could have on completing the deal in the manner that it was initially strategically set out, both CEOs believe the “trauma” caused by the global pandemic only reinforces the logic behind the combination.

However, the outbreak of Covid-19 has revealed shortcomings in cover when it comes to pandemic and both also agree product innovation to maintain the industry’s reputation will be essential.

In the following segment of the interview, Case and Haley address the impact of Covid-19 on the deal, their views on how the industry has responded and the need for further investment in innovation.

The deal

Do the recent events change the logic of bringing Aon and WTW together?

Greg Case [Aon]: For us, this moment strengthens the logic behind this combination. From Aon’s standpoint, we’ve been on a mission for the last decade to change the firm to serve clients more effectively. By having this combination, it will further ensure that mission. 

John Haley [WTW]: If you think about why we brought the two firms together, it was not about getting bigger, it was about getting better. One of the things Greg and I stressed when we were talking to both colleagues and investors about this was the notion that innovation was going to be what we were looking for. 

We’re proud of a lot of things that our industry has done, but we also recognise the vast amount of client needs that are not being addressed or are under-served. The building of the ‘new Aon’ is about ensuring we have the capacity to help address these needs. It’s about what we’re going to be in the future. 

If you think about Covid-19 and the shortcomings it has addressed in the way our clients deal with all manner of risk and contingencies, this just strengthens the case for the combination.

“For Aon and for Willis, this was not a deal that we had to do but a deal that we wanted to do”

John Haley

How is Covid-19 affecting the technicalities of this transaction?

GC: Because the combination is an all-stock transaction, the current market volatility will not slow down or impact our ability to close in any way, shape or form.

JH: For Aon and for Willis, this was not a deal that we had to do but a deal that we wanted to do. 

Both sides could see the vision of the transaction and what we can build here and that’s one of the reasons we set it up as an all-stock deal. This has placed us in a better position going forward and has meant that there are no distractions to get this done.

I do think that the market may be a little slower dealing with regulatory and other considerations, but we currently think that any delay will only be at the margin.

Do you feel the current timetable will be comfortable to handle any regulatory delays?  

JH: We certainly would expect to get through in the first half of 2021. Greg and I get along well on many different levels, including the fact we both recognise how impatient we are to get this deal done. The notion of waiting until 2021 doesn’t appeal to either one of us already!

The regulators have an important job to do and we need to ensure that we are responsive.

GC: We are excited about the potential we have together and want to get there as soon as we can. We will be interacting virtually with all of the different regulators around the world and that is already on track and work is in progress. We’re excited and committed to getting this done as quickly as possible. 

How have Aon and WTW responded to the news since the March announcement?

JH: What has been fantastic is how our WTW colleagues around the world have embraced the idea of the combination with Aon much faster than we could have imagined.

Whenever there are major changes within a company it always takes time for people to process. I’m not sure if it’s the macro-economic backdrop at play or whether it’s the logic and strategic rationale of the deal, but our colleagues have really embraced what we’re doing and have signed up to that much faster than we could have originally thought.

GC: Colleagues see the combination as a real catalyst to accelerate that journey on behalf of clients. We have high expectations and they have been exceeded as we have spent more time with John and the team.

Any more colour on the operational structure?

GC: Eric Andersen [president of Aon] and Julie Gebauer [head of human capital & benefits at WTW] have done a terrific job working together, quarterbacking and providing overall guidance on what we’re doing. It reflects the shared leadership that we’re trying to bring together as we shape the leadership of the combined firm.

This is less about operational structure for us and more about defining the client mission and determining what it means for clients around innovation, analytics, content and insight. It’s about framing the best of both firms together. Once that is in place, we can turn our attention to the structure we want in place to achieve that.

Have you had any thought on head count efficiencies?

GC: This combination is really about client content and capability. In terms of the numbers that are there, this is a small percentage of what we have experienced in previous combinations and this is not about a cost or efficiency play. It’s really about growth and purpose.

Regarding the inevitable impact on the global economy in 2020, does this have any bearing on the assumptions of the deal and the projected earnings of the combined group?

GC: The basic offering fundamentals of this combination and the current environment reinforces the logic behind this transaction. The financial arrangements that we have mean that the current market volatility doesn’t impact our ability to close which is very unique. 

JH: We didn’t add a cash component in here because we were both so excited by this transaction. The volatility doesn’t affect the relative value of Aon and WTW in terms of what they bring together. It affects both firms equally, but we don’t expect any roadblocks in that regard.

Industry response

Are you happy with the industry response to the first wave of Covid-19 claims?

GC: Our world revolves around client needs and we are confident that the industry – carriers and brokers alike – will come together to support clients. 

This current trauma reinforces the need for innovation – more sophisticated solutions are required and we’re committed to helping clients source those. We are confident that the industry will come together and facilitate that.

JH: I agree with Greg and would just add this additional point. Following any major catastrophe or tragedy, there are always things that you can highlight which you could have done better. I’m not sure that now is the best time for us to have that reflection, but we certainly will do once this is over.

“The bigger picture and ideas around [Aon and WTW] coming together have never been more relevant, especially when we think about the impact of Covid-19”

Greg Case

What is the message Aon and WTW would like to give to customers in response to the Covid-19 crisis?

GC: We’ve been very fortunate, we’ve gone remote and things have gone very, very well. We have 100,000 users on our webex system everyday.

We want to make sure we are operating from a position of strength and that we’re supporting everyone in every way we can. We want our clients to know that in every way, shape and form, we’re fully operational. Our technology platforms are working extremely well and colleagues are connected all around the world, ready to serve clients.  

The bigger picture and ideas around [Aon and WTW] coming together have never been more relevant, especially when we think about the impact of Covid-19. We need to work together to solve industry problems with innovation and now, more than ever, we want clients to know we’re reinforcing the importance of innovation on their behalf and we want to continue to evolve to meet their needs more than anything else. 

JH: When Covid-19 struck, our first thought was that of our colleagues and their families and ensuring they are supported, safe and that we’re doing everything we can for them. And the same goes for our clients, making sure that we can assist them in these extraordinary times. 

This is what we’re all about as a firm. We’re looking at this as an opportunity to show what we can do when people have some really pressing needs. One of the things Greg and I were talking about recently is how pleased we are with the businesses that we’re in. Especially when we think about the services we bring to our clients, whether we’re helping them manage risks or helping with retirement and benefits, talent and rewards or where we help them with capital to protect and save institutions and individuals.

The businesses we are in are great to be in at any time, but they’re great businesses to be in especially during this crisis.