Willis Group Acquires HRH; To Become Willis HRH in North America
Global insurance broker Willis Group Holdings Limited and Hilb Rogal & Hobbs Company, one of the world's largest insurance and risk management intermediaries, announced on Sunday that the companies will combine forces in a transaction that will double Willis’s North America revenues and strengthen its leadership in attractive growth markets.
Willis valued the deal at $2.1 billion, including $46 a share in cash and stock, plus $400 million in debt, the London- based company said in a statement yesterday. The bid is 49 percent more than Hilb Rogal's closing share price of $30.89 on June 6 in New York Stock Exchange composite trading.
The purchase of Hilb Rogal will enable Willis Chief Executive Officer Joseph Plumeri to increase North American revenue by almost 50 percent, where Marsh & McLennan Cos. and Aon Corp. dominate the market. Brokers are consolidating to cushion themselves against declines in revenue as insurance rates fall. Willis is set to become the No. 3 U.S. brokerage, according to a ranking by Business Insurance magazine last year.
Hilb Rogal ranks as the No. 8 U.S. insurance broker and has more than 140 offices worldwide, according to the company's Web site. First-quarter profit at the Glen Allen, Virginia-based company fell 38.5 percent to $15.5 million, while profit at Willis declined 1.8 percent to $166 million. Willis said it's acquiring Hilb Rogal for about 2.4 times estimated 2008 revenue.
The acquisition would be the largest of an insurance broker since January 1999, when Marsh & McLennan bought London-based Sedgwick Group Plc, then the world's third-largest, for 1.25 billion pounds (valued at $2.05 billion at the time).
Published on June 9, 2008
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