Gallagher expects no renewals conflict as Willis Re deal nears Q4 close

CEO J. Patrick Gallagher does not expect Arthur J. Gallagher & Co.'s Gallagher Re business and Willis Re to go head to head at the Jan. 1, 2022, renewals, noting there is little to no overlap in the major renewals across the two businesses' trading book.

The businesses are "very complementary" and there will be "no conflict whatsoever," Gallagher said during an Oct. 28 earnings call.

Arthur J. Gallagher's pending acquisition of Willis Re from Willis Towers Watson PLC is on track to close in the fourth quarter after receiving competition clearance in five of six jurisdictions, according to the CEO. The deal awaits the decision of the U.K. Competition and Markets Authority, which is investigating whether the transaction will lead to "substantial lessening" of competition in the country.

The CEO expressed excitement over the deal, which was initially stalled after the collapse of the proposed merger between Aon PLC and Willis Towers Watson near the end of July. He said the deal "adds so much" to Arthur J. Gallagher, particularly to the company's ability to produce middle-market retail, property and casualty business globally.

Arthur J. Gallagher and Willis Re professionals are working together to ensure the businesses will be well positioned to service clients after the deal's completion, according to the CEO.

"Our 40-year acquisition history allows us to leverage our proven M&A integration path. Integration is in our DNA," Gallagher noted. But even without the reinsurance merger, Arthur J. Gallagher is poised to end 2021 on a strong note when it comes to M&A, he added.

The company has more than 50 term sheets signed or being prepared, representing about $400 million of annualized revenues, in its tuck-in M&A pipeline. If successfully completed, these will be added to the 19 mergers the company has closed so far in 2021, representing nearly $200 million of annualized revenue.