The merger of Willis Group Holdings and Towers Watson announced this morning is indicative of the industry’s focus on offering a more comprehensive suite of insurance, benefit advising and professional services to a wider customer base, and experts agree it probably won’t be the last merger announced in the near future.

Willis Group Holdings, the third largest brokerage, and the professional services firm Towers Watson have agreed to an all-stock merger that values the combined company at $18 billion. The combined company, to be named Willis Towers Watson, will have 39,000 employees in more than 120 countries and revenue of about $8.2 billion.

For brokers, the Willis and Towers Watson merger may represent an opportunity as a new entrant in the acquisition space, says Perry Braun, an EBA Advisory Board member and executive director of Benefit Advisors Network. It may also represent a threat, however, due to the new company’s strong middle-market and up-market presence.

“When the assimilation has matured, the combined company may represent a more cost-effective, cost-efficient model for employer clients in the middle-market and up-market presence,” says Braun. “Clients in the middle market will have access to cost-affordable subject-matter experts that up to this point were supporting larger clients, while the combined entity builds a scalable infrastructure model.”

The mid-size employer market (with 100-499 employees) is a promising one for benefit advisers, as more than 7 in 10 medium-sized businesses use a broker or benefits consultant to select employees’ benefits options, according to the 2014 Aflac Workforces Report. Medium-sized businesses are more likely than their small and large counterparts to rely on insurance experts to determine what changes should be made to their benefits packages in a changing health care environment, it found.

Portfolio of products

“This is all about accelerating the growth opportunities of the two companies,” Willis Chief Executive Officer Dominic Casserley said on a conference call. “We both felt we could succeed by ourselves, but when we saw the two of us together we saw the upside being significant.”

The companies say the combination “offers clients a broader range of advice, analytics, specialty capabilities and solutions covering benefits; brokerage and advisory; talent and rewards; exchange solutions; and risk and capital management across all segments and geographies

“The opportunity to deliver significant savings to our growing middle market client base with Towers Watson’s market-leading private exchange platform is particularly attractive,” says Casserley.

John Haley, chairman and chief executive officer of Towers Watson, says, “We see numerous opportunities to enhance our growth profile by offering integrated solutions that leverage Willis’ global distribution network and risk advisory and re/insurance broking capabilities to deliver a more robust set of analytics and product solutions across a broader client base, including accelerating penetration of our Exchange Solutions platform into the fast growing middle-market.”

In a similar move, Aon in 2010 merged with Hewitt Associates to offer a broader portfolio of products.

See also: Aon buys Hewitt for $4.9 billion

Braun says industry mergers “will continue to be focused on bringing a wider and deeper set of services to clients of the middle employer market and larger.”

The goal, he says, “is to increase market share due to the expansion of services, and in so doing the strategy is to scale the costs of the infrastructure needed to meet the wider and deeper set of services.”

See also: Willis, Towers Watson merger: 'They're not us'

Willis Chairman James McCann will be chairman of the combined company and Towers Watson Chairman and Chief Executive John Haley will be its CEO. Willis’ Casserley will be president and deputy CEO of the combined company. Its board will consist of six directors from each company. Towers Watson’s chief financial officer, Roger Millay, will be CFO.

The deal is expected to close by the end of this year.

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