Willis Group Holdings Plc, the world’s third-largest insurance broker, and risk adviser Towers Watson & Co. agreed to an all-stock merger creating a firm with a combined market value of $18 billion.

Insurance consolidation has been proliferating for years, underscored by many middle-market transactions. In June, J.C. Flowers agreed to buy health insurance provider AmeriLife Group, and before that, in May, PE-backed Confie Seguros picked up three insurers in Buffalo, New York. 

Towers Watson shareholders will receive 2.649 Willis shares for each share they own and a one-time cash dividend of $4.87 a share, according to a statement Tuesday. The combined company, of which Willis will own 50.1 percent, will be named Willis Towers Watson and be domiciled in Ireland.

“We view this as a defensive move by both companies,” said Eamonn Flanagan, an analyst at Shore Capital Group Ltd. in a note to clients. “To us, Willis appears to be struggling to deliver on its own cost savings plans without damaging its own franchise and is losing key personnel. Towers Watson appears to be highly rated.”

Willis has been pursuing deals to extend its geographic reach and add customers seeking coverage for specialized risks. The firm offered to buy 70 percent of French broker Gras Savoye SAS in April and in January agreed to purchase Miller Insurance Services. The merger announced Tuesday comes amid a flurry of consolidation among property and casualty insurers amid falling rates and increased competition.

“The rationale for the merger is powerful,” Willis Chief Executive Officer Dominic Casserley said in the statement. “At one stroke, the combination fast-tracks each company’s growth strategy and offers a truly compelling value proposition.”

Willis Chairman James McCann will become chairman of the combined company and Towers Watson CEO John Haley, 65, becomes CEO. Casserley will be deputy CEO. The new board will consist of six directors nominated by Willis and six by Towers Watson, including Haley and Casserley.

The combined company will have about 39,000 employees in more than 120 countries, and pro forma revenue of about $8.2 billion last year. Willis Group currently has a market value of $8.14 billion and Tower Watson $9.57 billion.

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