While Aon and Willis Towers Watson were trying for many months to land their merger, their competitors were able lure away some of their producer talent – capitalizing on the “distraction and uncertainty” that existed for both brokers.

Aon’s proposed $30 billion acquisition of Willis was scrapped in July after the U.S. Department of Justice filed a lawsuit to block the combination on antitrust grounds. Aon and Willis officially had been working on the deal for 16 months.

One of the beneficiaries of this period of distraction has been Marsh McLennan, its insurance broking subsidiary, Marsh, and other competitor brokers.

Marsh has been able to capitalize “on the opportunity they see with their two biggest competitors having some element of distraction and uncertainty,” said Dan Glaser, CEO of Marsh McLennan, during a recent analysts’ call.

In the first six months of 2021, Glaser said, MMC’s headcount has grown nearly 2,000, mostly within Marsh.

Indeed, he said, Marsh McLennan’s level of new hires from Aon and WTW after their merger was announced last year was “three times higher on a net basis than it was in the 15 months prior to the announcement.”

“I think talent begets talent. People are attracted to work in environments with smart, creative, dedicated people,” Glaser continued. “It’s clear that the issues of Willis, in particular, and Aon, are creating a short-term opportunity that will run its course one way or the other.”

“We’ve heard almost surprisingly explicit commentary from Marsh McLennan (MMC) about the size and quality of people it’s been able to recruit from Aon and WLTW,” commented Meyer Shields, property/casualty analyst at KBW, a Stifel company.

“Our understanding is that besides MMC – which now remains the world’s biggest insurance and reinsurance broker – dozens of smaller companies have recruited from Aon, and even more so from WLTW…,” Shields continued in a KBW Financial in Focus podcast, released on Aug. 3.

However, WTW CEO John Haley pushed back on the narrative that substantially higher levels of employees had left the firm. Over the past 16 months, attrition levels were “within the normal historical balance,” he said during a recent analysts’ call to discuss first half results.

Haley acknowledged that the broker has seen some employee attrition, but more so in the second quarter than previously – which was a trend also seen at other companies.

Although Willis has lost some valuable colleagues, the biggest issue was not attrition, he said, but rather how difficult it was to be able to hire new people during the merger process “because of the uncertainty of exactly how they would fit into the new organization.”

Haley noted that Willis will now be “aggressively recruiting and looking to replace some of the talent we’ve lost.”

Aon President Eric Andersen rejected any suggestion that its ability to attract talent had been disrupted as a result of the merger.

“We don’t really pay too much attention to the headlines or the commentators that talk about talent, and certainly reject the premise of disruption that we’ve been hearing,” he said during the Aon analysts’ call.

KBW’s Shields indicated in an Aug. 3 research note that the interest in Aon’s talent is likely to continue as Aon’s “small and large competitors remain willing and able to pay up for brokerage talent.”

“I’m sure Aon’s lost some people that it would have liked to keep, but this is an incredibly well-run and well-institutionalized business, and the outlook is pretty solid, especially in what appears to be a very favorable operating environment including still-rising P/C insurance and reinsurance rates, and rapid exposure unit growth,” said Shields in the KBW podcast.

“On the WLTW side, things are much less clear. I think the biggest question that investors need answered is who the next CEO will be, and how will he or she balance the need to spend a lot of money to replace talent that’s been lost on the one hand, against the fact that for various reasons, WLTW’s insurance brokerage margins have consistently trailed Aon’s and MMC’s,” he continued.

On the same day the Aon-Willis merger was terminated (July 26), Aon announced that CEO Case and CFO Case had extended their employment agreements until 2026. However, there were still questions about Willis’ plan for CEO succession, as Haley was expected to retire when the merger closed.

This week, Haley said he still intends to retire at the end of 2021 and is working with the board of directors “to ensure a smooth transition of the CEO role.”

An equity research note published by Wells Fargo Securities suggested that an announcement about the CEO could be made by investor day on Sept. 9.

*This story ran previously in our sister publication Insurance Journal.