NU Online News Service, Jan. 6, 2:49 p.m.EST

The drop in the unemployment numbers for December couldtranslate into improved earnings for insurance brokers as increasedemployment means growth in employee benefits and healthcareinsurance, says a financial analyst.

In a report, Meyer Shields, an analyst with Stifel Nicolaus,says that continued, long-term improvement in the unemployment rate“should benefit headcount-related insurance premiums [such asworkers' compensation and employee benefits].”

“In our view, property and casualty insurance-rate firming isgaining traction and should accelerate in mid-2012,” says Shields.At the same time, premium volumes and commissions should also seepositive impact based on improved business earnings or propertyvalues.

For specific brokers, Shields says while there is no breakdownof revenue splits for employee benefit and property and casualtyinsurance, both Aon and Marsh receive a high percentage of feebusiness “implying more insulation between weak employment numbersand broker revenues.”

On the other hand, brokers such as Willis, Brown & Brown andArthur J. Gallagher receive more commission-based revenue foremployee benefit and property and casualty business. Thistranslates into an uplift in revenues as employment slowlyrecovers.

Today, the U.S. Department of Labor released the Decemberunemployment figures reporting unemployment dropped to 8.5percent—a decline of 0.6 percent since August, the department said.The rate stood at 8.7 percent in November.

Non-farm employment rose by 200,000 in December, the departmentsays, with men receiving the lion's share of improvement as thatrate dropped to 8 percent from 8.3 percent in November.

Other categories of workers saw little change, the departmentsays.

Of the five public brokers reviewed by Stifel Nicolaus, allshould benefit from the improved employment figures. However,Willis and Brown & Brown will continue to see earningschallenges.

For Willis, says Shields, compensation and other expense growthcould “inhibit margin expansion,” while Brown & Brown must dealwith the reality that a significant amount of its book of businessrests in “the most economically-hard hit geographies of theU.S.”Based inDaytona Beach,Fla., the firm has a substantial amount ofbusiness in its home state.