Aon to buy reinsurance broker for $1.75B

Aon Corp., the world’s largest insurance broker, said today that it will acquire Benfield Group Ltd. for $1.75 billion. As part of the deal, Chicago-based Aon will pay $6.55 a share in cash for the London-based independent reinsurance broker and assume $170 million of Benfield’s net debt. Aon’s offer is a 29% premium to Benfield’s closing stock price yesterday. Following the merger, Aon expects to integrate Benfield’s business into its reinsurance business, which is known as Aon Re Global, and it will operate under the newly formed Aon Benfield Re brand, according to a statement from Greg Case, president and CEO of Aon. The combined firm would be expected to expand in regions such as Africa, Central and Eastern Europe and Latin America. Benfield is also expected to add its expertise to the Florida and Southeast property catastrophe markets in the United States, Case said. The new entity will serve the majority of insurers and reinsurers around the world on a pro-forma basis. By sharing administrative and support services, the brokers expect to save $122 million annually once the companies are fully integrated in 2011. The merger is expected to close by the end of the year, subject to closing conditions, regulatory clearance and shareholder approval by Benfield’s investors.