NU Online News Service, Dec. 9, 2:12 p.m.EST

Property and casualty insurance brokers received a continuedstable outlook from Fitch Ratings, as revenue and earnings growthnext year is expected to match or exceed levels for the first ninemonths of this year.

In a five-page report reviewing five publicly traded nationalinsurance-brokerage firms, Fitch says that despite premium gainsaiding top-line growth, brokers' revenues are expected to be“modest due to a flat rate environment” in the commercial-insurancemarket.

The shrinking supply of acquisition targets “of a size thatwould significantly augment the acquirers' total revenue streams”is expected to dampen non-organic growth, says Fitch.

In the rating service's review of the insurance brokers Aon,Arthur J. Gallagher, Brown & Brown, Marsh & McLennan, andWillis, average operating income increased for the group to over$600 million in the first nine months of 2011 from less than $600million during the same period in 2010.

The increase, Fitch says, was primarily on the strength onhigher earnings at MMC and at Aon from its acquisition of HewittAssociates.

Willis' results were negatively affected by debt repurchaseexpenses and its 2011 operational review, which led to a $130million charge.

For AJG and Brown & Brown, operating income was essentiallyunchanged.

Acquisition activity increased, Fitch says, with the number oftransactions through October 2011 equaling all of 2010 andsurpassing all of 2009.

“Fitch expects overall revenue growth to continue to be drivenby mergers and acquisitions, as a ready supply of smaller firms canprovide a source of new revenue for larger firms,” says Fitch.

A pending change in the capital-gains tax rate for 2013 couldcompel agencies to do more deals next year, Fitch says.