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

(RTTNews) - Jardine Lloyd Thompson Group plc. (JLT.L), supplier of insurance and employee benefits related advice, brokerage and associated services, announced that it will acquire the reinsurance brokerage business of Towers Watson (TW), a global professional services company, for a cash consideration of US$250 million or 156 million pounds.

Upon completion, Towers Watson's reinsurance brokerage business will be merged with JLT's reinsurance business, JLT Re, to create a new force in the international reinsurance market, with combined revenues of US$266 million or 166 million pounds and 700 people in 35 locations in 17 countries. 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 that will ensure clients have continued access to Towers Watson's risk consulting and software services. This Agreement will also provide JLT Towers Re with continued use of Towers Watson's proprietary actuarial models and software, alongside deep analytical and modelling capabilities that will be acquired with the business.

Upon formal completion of the transaction, Ross Howard, who is 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. Alan Griffin will step down as Chairman of JLT Re, but will retain a board and advisory role.

The acquisition is expected to complete before the year end. The two businesses will be fully integrated over the course of 2014 and 2015.

Total transaction and integration costs are expected to be approximately US$7 million or 4 million pounds and US$20 million or 12 million pounds respectively. The acquisition will be made on a debt and cash free basis and financed from JLT's cash resources and debt and is expected to be earnings accretive in the first full year following completion. The gross assets being acquired amount to approximately US$106 million or 66 million pounds.