Deals and People June 3, 2021

PE Firm to Acquire Aon’s U.S. Retirement Business

Aon says its newly revealed plan to sell its U.S. retirement business to Aquiline Partners is in part meant to address antitrust concerns related to its own merger with Willis Towers Watson.  

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News emerged Thursday that Aon has signed definitive agreements to sell its U.S. retirement business to Aquiline and its Aon Retiree Health Exchange business to Alight.

According to a statement from Aon, the total gross monetary value of the deal is approximately $1.4 billion, and the agreements are intended to “address certain questions raised by the U.S. Department of Justice in relation to the combination with respect to the markets in which these businesses are active.”

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In other words, the move is intended to resolve potential future antitrust issues for Aon while it works on its proposal to merge with Willis Towers Watson. According to the statement announcing the deals, Aon and Willis Towers Watson continue to work toward obtaining regulatory approval in all relevant jurisdictions.

“These agreements further accelerate our momentum to close our proposed combination with Willis Towers Watson,” explains Greg Case, Aon’s CEO. “These are very capable teams that have demonstrated exceptional dedication to our clients and our firm. I want to recognize their contributions and reinforce that we are confident they will have similar opportunities with Aquiline and Alight.”

For context, the proposed combination of Aon and Willis Towers Watson, which was first announced in 2020, is still undergoing regulatory review. In anticipation of potential antitrust scrutiny, Aon and Willis Towers Watson previously announced the divestiture of Willis Re, a set of Willis Towers Watson corporate risk and broking and health and benefits services, and Aon’s retirement and investment business in Germany.

With this latest development, the U.S. retirement business Aquiline will acquire includes approximately 1,000 staff, and the agreement covers U.S. core retirement consulting, U.S. pension administration and the U.S.-based portion of Aon’s international retirement consulting business—along with many individual solutions and tools, including the Aon Pooled Employer Plan (PEP).

The agreement with Aquiline does not include Aon’s non-U.S. actuarial, non-U.S. pension administration or international retirement businesses based outside of the U.S.

Aquiline Capital Partners is a private investment firm based in New York and London that invests in companies across financial services, technology, business services, and healthcare. With $6.4 billion in assets under management, the firm has invested in numerous businesses that help people plan and save for retirement.

“The retirement solutions sector is benefitting from an increased focus on long-term investment security and risk management of plans,” says Jeff Greenberg, Aquiline’s Chairman and CEO. “Aquiline’s significant experience across retirement and investments positions us to build on the strong business Aon has created. We look forward to working closely with the clients, management and colleagues of Aon’s U.S. retirement business to create further value for all stakeholders.”

Greenberg notes that all of the announced regulatory divestitures are contingent on the completion of the pending Aon and Willis Towers Watson combination, as well as other customary closing conditions. While Aon and Willis Towers Watson are working toward completing the proposed combination “as soon as possible in the third quarter of 2021,” the completion remains subject to the receipt of required regulatory approvals and clearances, including with respect to United States antitrust laws, as well as other customary closing conditions.

Data and Research June 3, 2021

Annuity Interest Grows Among Workers

Plan sponsors are also feeling a sense of responsibility in offering guaranteed lifetime income products.

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More workers are inquiring about guaranteed lifetime income products, reports new research from BlackRock.

Surveying just over 1,000 defined contribution (DC) plan participants, the 2021 BlackRock DC Pulse Survey finds that 89% of participants are interested in owning a product designed to generate retirement income, and almost nine in 10 believe that having guaranteed income in retirement would have a positive impact on their financial wellbeing.

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Interest among Millennial participants was strong—94% stated they are interested in owning a product designed specifically to generate retirement income, while 89% of Gen Xers and 83% of Baby Boomers shared the same interest.

The growth in awareness hasn’t only applied to working participants—retirees are recognizing its benefits, too. Of 311 retiree respondents, 76% noted how owning a guaranteed lifetime income product made a bigger difference than they originally believed, while 78% believed they would have benefited from a guaranteed income product if offered to them. Ninety-six percent of plan sponsors also revealed an added sense of responsibility in offering these products, and 82% say they are likely to add an annuity solution in the next 12 months.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 decreased hurdles for plan sponsors to offer in-plan lifetime guaranteed income products, but its adoption has been slow as of late, due to uncertainty, issues of portability and impacts brought on by the coronavirus pandemic.

While the study found that most workers are still on track to save adequately for retirement (87%), almost half of respondents indicated personal concerns over retirement income.

Fifty-five percent of respondents said they worried over the thought of having to generate their own retirement income, while 59% stated difficulty in translating retirement savings into monthly income. Sixty percent worry they will outlive their retirement savings, and 77% are looking for help to get through retirement rather than simply reaching it.

As more participants inquire about guaranteed lifetime income solutions, forecasts show a rebound for most annuity products in 2021. The Secure Retirement Institute (SRI) forecasts that all individual annuity products, except traditional variable annuities and fixed-rate deferred annuities, will recover this year due to improving economic conditions and high demand, with products including protection features reaching significant value. By 2025, SRI expects the annuity market to grow as much as 30%.  

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