The recent merger of Willis Group and Towers Watson has created a global advisory and brokerage firm valued at $18bn. The deal was met with raised eyebrows by several financial analysts, who argued that Towers Watson shareholders were being short-changed in a deal with significant strategic risks, all for the benefit of revenue synergies and the tax savings that will result from moving its tax headquarters to Ireland.

But what does the merger mean for underlying business in the area of global benefits and benefits administration?

Towers Watson brings to the table advisory services in benefits, HR, risk, and financial services, plus benefits administration services, including a private exchange, OneExchange. Willis brings its reinsurance and property/casualty insurance broker business, global underwriting, HR, and benefits services, and the Willis Advantage private exchange under a white label agreement with Towers Watson.

Global/Multi-Country Benefits

In early 2014, Willis launched a global human capital and benefits business, which combined its existing employee benefits and related consulting services, with services including:

• Pensions and retirement planning
• Healthcare
• Group risk and life cover
• Compliance consulting
• Data analytics consulting
• Communications consulting
• Wellness consulting
• HR consulting.

In early 2015, Towers Watson began to expand in India and South Korea as part of a larger initiative to provide a global benefits offering for MNCs. This expansion included the acquisition of Metis Insurance, which added benefits brokerage capabilities in India. 

The Willis and Towers Watson merger will now blend these separate capabilities and provide the new entity with a combined global benefits offering that will be comparable to what Mercer and Aon Hewitt have been offering in this space for the last few years.

The merger also equips Willis Towers Watson with additional resources that provide it with the scale to more effectively compete with Mercer and Aon Hewitt in general. For example, Willis Towers Watson will have ~39k employees in ~120 countries, compared to Mercer’s ~57k in ~135 countries and Aon’s ~69k employees in ~120 countries; and combined revenues for Willis Towers Watson are estimated at ~$8.2bn, compared to Mercer’s ~$12.9bn and Aon’s ~$12bn in 2014.

Benefits Administration & Private Exchanges

In the five years since the merger of Towers Perrin and Watson Wyatt to create Towers Watson, the company has made a handful of acquisitions that have strengthened its benefits administration business, specifically Health & Welfare (H&W) services.

The first acquisition was Aliquant in January 2011, which strengthened its H&W administration capabilities. A year and a half later, Extend Health was acquired for $435m to add a retiree exchange, followed by Liazon Corporation for $215m to enhance its exchange offerings. Most recently, Towers Watson acquired Acclaris for $140m to add in-house reimbursement account administration services.

The Extend Health acquisition was the initial stepping stone for Towers Watson to enter the exchange business, and following this Towers Watson launched OneExchange, a single exchange platform for pre‐ and post‐65 retirees and active employees. The Liazon exchange for active employees exists next to the OneExchange offering, which is focused on larger employers.

In mid-2013, Willis North America launched a private exchange, The Willis Advantage, under a white label agreement with Towers Watson using the Liazon technology. The Willis Advantage targets mid-sized clients.

The merger of Willis and Towers Watson will bring together both of these private exchange businesses, creating a greater presence targeting both mid-sized and large organizations.