Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Aon-Willis non-deal triggers $1b break fee
Aon will pay a US$1 billion break fee to Willis Towers Watson after a proposed marriage between the two global insurance broking and professional services firms fell over last week due to US regulatory problems.
In a joint statement (July 27), Aon and Willis Towers Watson (WTW) blamed the end of their 16-month engagement on a legal challenge from the US Department of Justice (DOJ).
Greg Case, Aon global chief executive, said in the release: “Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the US Department of Justice.
“The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.”
Aon and WTW are both incorporated in Ireland and headquartered in London with respective annual revenues in 2020 of more than US$11 billion and US$9 billion.
The firms were due to provide quarterly market updates on July 30 (Aon) and August 3 (WTW).
Meanwhile, in Australia, the only change has been a move at the top of the investment consulting division, with Aongus O’Gorman replacing Martin Goss as head of the investment team, following the decision by Goss to move back to a client consulting role with the firm. O’Gorman, the head of ‘dedicated and specialist solutions’ for investments in Australia, commenced the new role from August 1.
‘Dedication solutions’ includes the implemented investment services offered by WTW, including ‘outsourced CIO’, which are popular offerings overseas but relatively new to the Australian operation.
Goss has been with WTW for 14 years, the last five years as head of investments. O’Gorman joined WTW in 2015, having previously been head of implemented solutions for QIC and then forming his own consulting business.
With the proposed merger between the two global; firms, as reported in June, the DOJ spiked Aon’s mooted US$30 billion purchase of WTW with its legal challenge claiming the takeover would create anti-competitive market conditions.
“As alleged in the complaint, Aon and Wills Towers Watson operate ‘in an oligopoly’ and ‘will have even more [leverage] when [the] Willis deal is closed’,” the DOJ release said at the time. “If permitted to merge, Aon and Willis Towers Watson could use their increased leverage to raise prices and reduce the quality of products relied on by thousands of American businesses – and their customers, employees, and retirees.”
Aon and WTW, respectively listed on the New York Stock Exchange and Nasdaq, launched merger talks in March 2020 at the start of the global coronavirus pandemic.
In the wake of the COVID-19 outbreak Aon instigated controversial plans to cut staff pay and contractor fees in emergency cost-saving measures it later rescinded.
According to a statement issued this June, the proposed merger was intended to “accelerate innovation on behalf of clients creating more choice in an already dynamic and competitive marketplace”.
The WTW scheme of arrangement to facilitate the takeover has now lapsed allowing both firms to “move forward independently,” the latest joint release says.
Following the break-up, the WTW board approved a US$1 billion top-up to its share buy-back program that already had US$500 million of outstanding share repurchase capital.
“Willis Towers Watson also expects to utilise the significant capital generated by cash flow from operating and non-operating activities to, among other things, increase its investment in organic and inorganic growth opportunities over the next three years,” the group said in a statement last week.
