Willis Towers Sells Reinsurance Broking Business to Arthur J. Gallagher

Global advisory, broking and solutions firm Willis Towers Watson (WLTW) has signed an agreement with Arthur J. Gallagher & Co. (AJG) for the sale of its reinsurance broking business Willis Re.

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While Willis Towers offers risk management, insurance brokerage, reinsurance and advisory services, Arthur J. Gallagher provides consulting, insurance brokerage and third-party claims administration and settlement services.

Willis Towers will get a total upfront cash payment of $3.25 billion from the sale as well as a milestone payment of up to $750 million in cash in 2025. (See Willis Towers Watson stock chart on TipRanks)

The CEO of Willis Towers Watson, John Haley, said, “Following the termination of the proposed combination with Aon PLC (AON), we have been taking time to reflect on what we have learned about Willis Towers over the last 16 months and determine how we will move forward as an independent company. As part of this, we conducted a review of strategic alternatives for Willis Re, our global reinsurance business. While we highly value Willis Re and our colleagues who contribute to its success, we concluded that divestment was the appropriate path for this business and for Willis Towers.”

The sale is expected to be completed latest by the end of the first quarter of 2022.

On August 8, Robert W. Baird analyst Mark Marcon maintained a Buy rating on the stock with a price target of $232 (5.8% upside potential). The analyst expects the company to report earnings per share (EPS) of $1.42 in the third quarter.

Overall, the stock has a Moderate Buy consensus based on 5 Buys and 5 Holds. The average Willis Towers Watson price target of $249.88 implies nearly 14% upside potential. Shares of the company have gained 8.7% over the past year.