Much has been written about how the combined operations of Willis and Towers Watson will fare, but one aspect of the business that little has been heard about is Willis Re.
From the outside at least, the reinsurance broking arm of Willis has had little impact from the merger between Willis and Towers Watson. That is mainly because Towers Watson agreed to sell its reinsurance broking arm to Jardine Lloyd Thompson back in September 2013 for some $250m.
That does not mean there is absolutely no cross over however, as some aspects of the legacy Towers Watson business will share clients with Willis Re, albeit the two units are often working with separate parts of their mutual client.
One example of this is the actuarial consultancy and software business, built from the prior Tillinghast, Watson Wyatt, and EMB operations – now rebranded as Risk Consulting & Software or RCS – that continues to operate within the larger Willis Towers Watson group.
“RCS is working with the same clients and prospects that we are, along two different but complementary angles,” James Kent, co-president for Willis Re and president of Willis Re North America, said.
“We’re generally working at the cedant’s C-suite and ceded re level around reinsurance structuring, and our colleagues at RCS are working at the actuarial and advisory level on issues such as capital modelling, reserve analysis, pricing and predictive modelling. Our new joined-up model means that Willis Towers Watson is able to talk right across the spectrum of risk with an insurance company.”
As Kent explained, the merger of Willis with Towers Watson means the combined group is now able to assist insurers in every aspect of their business.
“There’s no increase to the scale of Willis Re – Towers Watson didn’t have a reinsurance broking business that we could bolt onto ours and say “We’re growing our market share because we’ve just acquired a reinsurance broker”. Instead, what the merger brings us is something different and complementary: a reinsurance broker allied with a risk consultant and software provider.”
Many of the strong relationships that Willis Re has with the largest global insurance firms are now augmented by relationships established by the former Towers Watson.
But Kent believes there are still significant opportunities for both Willis Re and the other Willis Towers Watson businesses to reap the benefits of cross-selling their services.
“Some of our insurance clients already have significant in-house capabilities, whether that’s in enterprise risk management or investments or predictive modelling; our colleagues in RCS can still offer valuable support, but perhaps at a less intensive level. On the other hand many of our clients and prospects have challenges in those areas and they need help with predictive modelling to improve underwriting profitability, they need enhanced capital modelling to better understand how to manage risk and they also need software to support these functions. Many insurers are looking to replace outdated legacy systems,” said Kent.
“When you look at all of that, we’re seeing some really strong traction, particularly in the regional and specialty business, and that’s led to some notable wins,” Kent added. “Many companies want to use RCS because it’s got such great tools and expertise to help their businesses, and with the Willis Re team joined up with the RCS team, we’re seeing immediate wins with both new and existing clients. That means increased revenue to Willis Towers Watson, because RCS is a fee-based consultancy. Besides the benefits of a joined-up offering, Willis Re clients enjoy preferred pricing on RCS services and software, so that’s another incentive to do business with the group.”
As Willis Re’s president for North America explained, it is not only the RCS business where Willis Re can benefit from the legacy Towers Watson’s relationships with certain clients.
“It’s not just RCS – some insurance companies have a strong relationship with the human capital and employee benefits part of the Towers Watson business, which can significantly shorten our sales cycle,” said Kent. “We’ve already made sales following introductions from other parts of the Willis Towers Watson group to companies where Willis Re didn’t have a particularly strong relationship before.”
Because of the challenges facing the industry, Kent said the timing of the tie-up between Willis and Towers Watson could not be better.
“We feel it’s added a different dimension to our business; both Willis Re and RCS are seeing the benefits of what we’re trying to do by joining up,” he said.
“The businesses are complementary, and as our CEO John Haley has said, it’s a merger of scope, not scale. Scope is something that really matters to a lot of our clients right now and the merger means that we can now really help them across the entirety of their business.”