Q2 Growth Among Private P&C Producers Outpaces Public Brokers

Median organic growth among mid-size and large privately held P&C insurance agencies and brokerage firms is outpacing the performance of publicly held brokers, according to a new survey by management consulting firm.

Regan Consulting released its second-quarter “Organic Growth and Profitability” survey that asks 125 privately held agencies and brokerage firms about their performance over 2013’s second quarter. The median revenue of the firms completing the survey is approximately $15 million.

Median organic revenue growth among the producers reached 6.9 percent in the second quarter of 2013, the highest since the survey began in 2008.

The survey also found that the agent-broker profitability margin—the measure of EBITDA (earnings before interest, taxes, depreciation and amortization)—reached 24 percent, the highest recorded since the survey began in 2008.

Other survey findings include:

  • Privately-held firms maintained an organic growth advantage over public brokers, growing 1.6 percentage points faster than the public brokers’ 5.3 percent average rate, as measured by reported results for five large publicly held brokerage firms. The five are Aon, Arthur J. Gallaher, Brown & Brown, Marsh & McLennan and Willis. 
  • Organic growth for commercial lines grew at a median rate of 8.2 percent through the first half of the year, up 1.4 percentage points from the first quarter of 2013.
  • The second quarter OGP survey found that agents and brokers, after a strong first-half performance, have increased their full-year 2013 organic growth projection to 7 percent.

Despite the fact that contingent commissions inflate Q2 results, Reagan says that the earnings trend is strong nonetheless.

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