Aon and Willis Towers Watson have announced they are pulling out of a proposed merger after the US Department of Justice filed an antitrust lawsuit against the $30bn deal.

Both Aon and Willis Towers Watson are two of the biggest captive insurance managers globally, and this merger would have possibly led to the combined entity dethroning Marsh as the largest captive manager in the world.

An announcement by Aon and Willis Towers Watson today said the organisations had mutually agreed to terminate the merger to end the DoJ probe.

As a result of the cancellation of the merger, Aon will pay $1bn termination fee to Willis Towers Watson.

The merger was announced in March 2020, with the Department of Justice (DoJ) filing the lawsuit in June 2021.

The DoJ alleged that allowing two of the ‘Big Three’ global insurance brokers to merge would threaten to eliminate competition, raise prices, and reduce innovation for the American businesses, employers, and unions which rely on their services.

Aon’s CEO Greg Case said in the announcement that the deal had been terminated due to an “impasse” with the Department of Justice.

“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the U.S. Department of Justice,” Case said.

“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.

“Our respect for Willis Towers Watson and the team members we’ve come to know through this process has only grown.”

Willis Towers Watson CEO John Haley spoke primarily about moving forward and serving clients.

“Our team’s resilience and commitment are a source of pride and confidence. They have continued to bring to life Willis Towers Watson’s compelling value proposition to better serve our clients in the areas of people, risk and capital,” Haley said.

“Going forward, our focus remains steadfast on our colleagues, our clients and our shareholders. We believe we are well-positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market. We appreciate and deeply respect all the Aon colleagues we got to know through this process.”