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Oct 2021

Gallagher to take over WTW's treaty reinsurance brokerage operations

Source: Middle East Insurance Review | Sep 2021

Arthur J Gallagher (Gallagher) has agreed to acquire Willis Towers Watson’s treaty reinsurance brokerage operations. The transaction is expected to close during the last quarter of 2021.
Under the agreement, Gallagher will acquire the combined operations for an initial gross consideration of $3.25bn and potential additional consideration of $750m subject to certain third-year revenue targets.
Gallagher intends to finance the transaction using cash on hand, including the $1.4bn of net cash raised via its follow-on common stock offering and the $850m of net cash borrowed via its 30-year senior note issuance, short-term borrowings and additional free cash generated before close. 
Integration is expected to take approximately three years with total non-recurring integration costs estimated to be approximately $250m.
The operations include all of Willis Re’s treaty reinsurance brokerage operations. In 2020, these operations generated $745m of estimated pro forma revenue and $265m of estimated pro forma EBITDAC.
Benefits of the acquisition for Gallagher include an expanded global value proposition within reinsurance brokerage. The company will obtain analytics capabilities that include actuarial services, CAT modelling, dynamic financial analysis, rating agency analysis and capital modelling.
Gallagher will also benefit from the talent acquisition and increased product breadth and offerings. This will leverage Gallagher’s alternative risk and ILS business and relationships with major insurance carriers. M 
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