NU Online News Service, June 14, 3:02 p.m.EDT

Brokers will likely benefit from the uncertain future for U.S.healthcare reforms as demand for brokers’ services should increase,according to Moody’s Investors Service.

In a report on the state of global-insurance brokers, Moody’ssays that with U.S. healthcare insurance in flux, the employeebenefit products and services insurance brokers provide will bemore in demand by clients as healthcare is expected to remainemployer based.

The report’s assertions back up comments in May by J. Patrick Gallagher, chairman, presidentand chief executive officer of Arthur J. Gallagher, who said that,as bad as he believes the new health-care law is, it is providingopportunities for his firm.

“I’ve never seen such a selling environment,” Gallagher said atthe time, noting that new clients are seeking brokers capable ofdealing with the new law. “That business is on fire and continuesto be.”

However, the increased business for larger brokers comes at theexpense of smaller ones, which are unable to keep up withcompliance issues and do not have the resources to keep up,Gallagher said.

Regarding Moody’s outlook on global-insurance brokers overall,the report says they have weathered recent economic turmoil andhave exhibited steady performance through the soft market, leadingMoody’s to give the sector a stable outlook.

Moody’s says it recognizes that the firms continue to havechallenges concerning integration of acquired firms and maturity ofdebt for leveraged brokers.

However, business is expected to improve along with modesteconomic recovery through this year and next, with real economicgrowth put at 3 percent this year, and rising to 3.5 percent nextyear for the G-20 countries.

The report says the firming property and casualty market isgiving brokers a boost in revenue as insurers seek to improve theirprofitability with rate increases. The combination of these rateincreases and the improving economy expanding businessopportunities should support single digit organic revenue growthfor the brokerage firms.

Moody’s says that “most rated brokers have dedicated merger andacquisition teams” to work on acquisitions. This sector is ripe forconsolidation, the report says, and acquisition activity willcontinue to fuel growth.

Of the 10 global insurance brokers Moody’s rates, all havestable outlook except Towergate Holdings II Ltd. with a negativerating outlook.

The rating service rates the major public brokers, Marsh &McLennan Companies, Aon plc and Willis Group Holdings. All threeare in the “Baa” range.

Among the privately held brokers, Moody’s rates HubInternational, USI Holdings Corp., Alliant Holdings, AmWINS Group,Inc., and HMSC Corp. All of these brokers are in the “B” range.