Jardine Lloyd To Buy Towers Watson's Reinsurance Brokerage Business For $250 Mln

(RTTNews) - UK-based insurance and re-insurance business Jardine Lloyd Thompson Group Plc (JLT.L) Friday said it will acquire the reinsurance brokerage business of US-based Towers Watson & Co. (TW) for a cash consideration of $250 million or 156 million pounds.

The gross assets being acquired totals about $106 million or 66 million pounds. The deal is expected to add to Jardine's earnings in the first full year following completion. Jardine Lloyd noted that the acquisition will be made on a debt and cash free basis and financed from JLT's cash resources.

The New York-based Towers Watson is a professional services company, that provides human capital and financial consulting services. For the year ended June 2013, its reinsurance brokerage business generated revenues of $166 million and profit before tax of $26 million.

The acquisition will combine Towers Watson's North American and London Market reinsurance businesses with JLT Re's international reinsurance operations.

Upon completion of the deal, Towers Watson's reinsurance brokerage business will be merged with Jardine Lloyd's reinsurance business, JLT Re. The combined business will be branded for a transitional period as JLT Towers Re.

As part of the transaction, JLT Re and Towers Watson have entered into an alliance agreement, under which clients have continued access to Towers Watson's risk consulting and software services.

The agreement will also provide JLT Towers Re with continued use of Towers Watson's proprietary actuarial models and software, together with analytical and modelling capabilities.

The acquisition is expected to be completed before the end of the year 2013, and the full integration of the businesses is anticipated over the course of 2014 and 2015.

Jardine Lloyd said the combined business will have revenues of $266 million or 166 million pounds, and 700 people in 35 locations in 17 countries.

The company expects the total transaction and integration costs to be around $7 million or 4 million pounds and $20 million or 12 million pounds, respectively.

Upon completion of the deal, Ross Howard, 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.

Further, Alan Griffin will step down as chairman of JLT Re, but will retain a board and advisory role.

In London, Jardine Lloyd shares are currently trading at 936.5 pence, up 21.5 pence or 2.35 percent. Towers Watson closed Thursday's trading at $100.09 on the NYSE.