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Willis Towers Stays the Sale of Wholesale Insurance Unit

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According to reliable sources, Willis Towers Watson PLC has stalled its plans to sell its wholesale brokerage business, Miller Insurance Services LP. This suspension happened due to the subdued business environment and economic uncertainty amid the breakout of the COVID-19 pandemic, which sparked recessionary fears across the globe.

This sale was supposed to be made by the company to Aon Plc. (AON - Free Report) , which inked a deal earlier last month to acquire the former for nearly $30 billion. Per the terms of the agreement, Aon’s acquisition of Willis Towers Watson will be the biggest ever in the insurance industry in an all-stock transaction, thereby creating the world’s largest insurance broker worth of $80 billion.

The buyout of Willis Towers Watson by Aon will be a win-win situation for both parties. Therefore, the company is streamlining its operations to make its business portfolio more attractive.

WillisTowers Watson acquired Miller Insurance just more than three years ago. The business is performing quite well and its revenues increased 15% on an organic basis in the fourth quarter of 2019, driven by growth across its book.

Willis Towers Watson’s operating performance has been favorable. Commissions and fees, which forms a major component of the company’s revenue base continues to grow from the past many quarters. Commissions and fees associated with business transactions showed a marked improvement, backed by organic growth across segments and a rich contribution from integrations.

Further, the company’s geographic diversification supports its overall growth. With solid customer-retention levels and an expanding new business, we expect the company to bump up its revenues. For 2020, the company expects organic revenue growth of around 4-5% and 6-7% on an overall constant currency basis.

The stock has declined 22% year to date compared with its industry’s decrease of 25%.

 

Two other companies in the same space with stock price depreciation are Arthur J. Gallagher & CO. (AJG - Free Report) and Brown and Brown, Inc. (BRO - Free Report) , which have lost 19.9% and 15.4%, respectively, so far this year.

Willis Towers Watson carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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