Aon Abandons Heavyweight Merger with Willis Towers Watson

London-based Aon Plc has abandoned its efforts to pursue an all-share business combination with Willis Towers Watson, the company said in a statement on Wednesday.

The statement was issued just one day after Aon reported it is in the “early stages” of considering a buyout of the company. On Tuesday, Aon issued a release that was mandated by Irish regulatory requirements after news media outlets leaked intelligence of the buyout. Willis Towers is based in Ireland.

“Consistent with Aon’s stated focus on return on invested capital the firm regularly evaluates a variety of potential opportunities within and adjacent to its industry. Aon had considered such a possibility with regard to Willis Towers Watson,” Aon said in the Wednesday statement. “Aon today confirms that it does not intend to pursue the business combination.”

The transaction would have made the combined company the largest insurance broker globally, surpassing Marsh & McLennan’s current No. 1 spot in the market, according to data compiled by Bloomberg. The companies had held preliminary talks and Aon was preparing to submit a bid in the coming weeks, the publication reported, citing people familiar with the matter.

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“The company emphasizes that, at this point, its evaluation of a potential transaction is at a preliminary stage and there can be no certainty that any transaction will take place nor as to the form or terms on which any transaction might be pursued,” Aon said in the Tuesday statement.

Willis Towers Watson shares soared to an all-time high following the news, up approximately 5.2% after the statement was released, scoring a valuation of approximately $24 billion. Aon shares dipped considerably after the statement.

As of press time, Willis Towers Watson stock dipped 6.57% , and Aon shares rose 4.47%.

Willis Towers Watson has not issued a formal statement on its website regarding the news.

Aon generated $10.8 billion in revenue in 2018, while Willis Towers Watson generated $8.5 billion and Marsh & McLennan reported $15 billion. Willis Towers Watson was formed after Willis Group Holding’s 2016 acquisition of Towers Watson & Co. for $8.9 billion, the largest insurance broker deal to date.

Marsh & McLennan last year carried out an agreement to buy Jardine Lloyd Thompson for $5.7 billion, which is expected to close at some point during the year.

Aon employs over 50,000 individuals in 120 countries, while Willis Towers employs approximately 43,000.

Tags: Aon, insurance, Merger, Willis Towers Watson

Ruth Reyerson

Editor’s note: An updated version of this story with CIO Sam Masoudi’s comments can be viewed here.

The executive director of Wyoming’s $8.5 billion pension fund will retire in July. Ruth Reyerson is departing after almost six years, staying on to help the transition as the Wyoming Retirement System searches for her successor.

Staff praised Reyerson’s accomplishments, such as her “focus on building a strong management team at every level of the organization,” according to Laura Ladd, the pension plan’s board chair. Ladd also highlighted Reyerson’s guidance on launching the fund’s online pension administration system.

“The new system dramatically improved service to our membership, making it possible for every member to log in at their convenience and obtain account information,” she said.

In addition to Reyerson’s guidance, the retirement system’s board and its relationship with the state legislature, assumption rate changes also helped increase the fund’s stability, according to a news release.

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“I came to WRS because of its good reputation and sincere concern for its members and their families. It has been very rewarding for me to take a good pension program, and keep it strong for the next generation,” Reyerson said.

Collaboration is another area Reyerson made a priority during her time with the fund. Reyerson, along with Sam Masoudi, the retirement system’s chief investment officer, developed an intern program that cultivates local talent from the state university. This turned out to be one of its best decisions.

“By hiring solely from the University of Wyoming, we’re keeping smart local kids in-state and building a more stable investment team,” Masoudi told CIO in a December interview. “This approach has greatly benefited the pension, and Wyoming legislators love it, too.”

The fund added $2 billion to its value under Reyerson’s watch, and its performance was in the 30^th percentile of its peers in 2018.

She has fought for both contribution rate increases and benefit adjustments, which requires changes in state law. She also advocated for the law combining the volunteer firefighter and emergency medical tacticians’ plans, which is unique to the state. A new law has added search and rescue divisions to the plan.

“Wyoming is a special place and I will always fondly remember my time here,” said Reyerson.

The Wyoming Retirement System manages the pension assets of eight defined benefit plans: The Public Employees’ Pension Plan, Wyoming State Highway Patrol, Game & Fish Warden and Criminal Investigators, Firemen’s Pension Plan A and B, Judicial Retirement Plan, Wyoming Law Enforcement, Air Guard Firefighter, and the Volunteer Firefighter and EMT Pension Plan. Six of those plans have funding ratios above 75%.

The board immediately launched a replacement search following Reyerson’s announcement. It expects to announce the new executive at its May 15-16 meeting. Vice Chairman Eric Nelson will lead the three-member search team, aided by consulting firm Align.

Interested applicants should send a resume and cover letter along with three professional references by April 12, 2019, to WRSapps@TheAlignTeam.org.

The board’s target allocation mix is 50% stocks, 17.5% private equity, 15.5% marketable alternatives, 15% fixed income, and 2% tactical cash.

Masoudi was unable to be reached for direct comment.

Even the Most Fiscally Fit States Have Pension Problems

Tags: Pension, Ruth Reyerson, Wyoming Retirement System