Briefly: U.S. Brokerage Sector “Solid”: Moody’s
Revenues down, but economic recovery expected to spur growth.
August 25, 2010
Although growth has slowed for some brokerages, the sector overall has remained stable by cutting costs, trimming non-core operations and easing back on acquisitions, the report, Insurance Brokerage Industry Scorecard, states.
“While the economic downturn and lower pricing resulted in marginal or even negative organic growth for some insurance brokers in 2009, overall the industry was able to maintain profitability,” says Benjamin Goldberg, co-author of the report. “Consequently, operating margins were fairly stable, and fixed-charge coverage and financial leverage metrics improved modestly.”
The recent step toward contingent commissions by some major brokerages represents “credit positive” for those brokersl giving them both incremental revenue and support for potential acquisitions, which “will remain a strategic focus for major insurance brokers given the fragmented nature of the industry, particularly in the U.S.,” Bruce Ballentine, the report’s co-author, states in an August 23 statement accompanying the findings.
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