Aon Benfield, a reinsurance intermediary and capital adviser, is formed out of acquisition of Benfield Group by Aon
UK-based Aon, a provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, has completed its acquisition of Benfield Group of US, creating Aon Benfield, a reinsurance intermediary and capital adviser.
The Benfield business has been combined with Aon’s existing and complementary reinsurance operations.
Pursuant to the terms of the previously disclosed implementation agreement between Aon and Benfield and the related announcement issued by Aon and Benfield in August 2008, Aon has completed its acquisition of the share capital of Benfield Group for GBP3.50 per common share and GBP2.80 per preference share, in each case in cash and the assumption of GBP91 million of Benfield net debt, representing an enterprise value of approximately GBP935 million on a fully diluted basis.
In connection with the acquisition, Aon announces a global restructuring plan intended to integrate and streamline operations across the combined Aon Benfield organisation. The restructuring plan is expected to result in cumulative costs of approximately $185 million over a three-year period, encompassing workforce reduction, lease consolidation, asset impairment and other costs associated with the restructuring plan.
An estimated 500 to 700 positions, predominantly non-client facing roles, are expected to be eliminated as part of the plan. The restructuring plan, before any potential reinvestment of savings, is expected to deliver approximately
$33-$41 million of savings in 2009, approximately $84-$94 million of savings in 2010 and approximately $122 million of annualised savings in 2011. All of the components of the restructuring plan are not finalised and actual savings, total costs and timing may vary from those estimated due to changes in the scope or underlying assumptions of the plan.
Grahame Chilton, vice chairman of Aon group and former CEO of Benfield, said: Since announcing our agreement, we have received strong support from colleagues and clients alike at both Benfield and Aon. This enthusiasm is recognition of the unparalleled set of capabilities we can now deliver as the new Aon Benfield. This deal is an industry-changing event which will create new standards in what intermediaries should be offering to clients.
Michael O’Halleran, executive chairman of Aon Benfield, added: By combining the talent and capabilities of Aon Re Global and Benfield Group, we are creating a powerful global franchise capable of expanding and redefining reinsurance and capital market solutions, as well as a compelling opportunity for current and prospective clients.