The country's largest brokerages will likely lose their marketshare to middle-market firms in the near future, a new report byCochran, Caronia & Co. predicted.

Adam Klauber, the author of the report and Cochran, Caronia& Co.'s managing director of equity research, said that rapidgrowth through acquisition over the past decade has saddled largebrokers such as Aon and Marsh with legacy expenses==includingpension liabilities, debt and goodwill.

He said, big players will have less financial flexibility andgreater expense drag than their smaller competitors.

The situation is further complicated by the softening rateenvironment in the industry and the elimination of contingentcommissions by large brokers in response to recent investigationsby New York Attorney General Elliott Spitzer, according to thereport.

Mr. Klauber said mid-market firms like Brown & Brown, HubInternational and Hilb, Rogal & Hobbs will fare better."Because they are smaller, these firms can continue to achieveincremental growth through acquisitions," Mr. Klauber advised.

Mid-market operations, he said, "also have less debt and greaterfinancial flexibility. In addition, unlike the larger firms, themid-market firms are continuing to generate revenue throughcontingent commissions, and can use these funds to grow theirbusiness."

Mr. Klauber said mid-market brokers with a greater potential togrow will be a better investment over time. A full copy of thereport can be found at www.cochran-caronia.com.