"Sustained organic growth and healthyindustry fundamentals have led to some big bets being placed onboth the acquisition and InsurTech fronts," Harrison Brooks, vicepresident of Reagan Consulting, said in a press release. (Photo:Shutterstock)
Independent insurance agents and brokers havecause to celebrate as the industry organic growth rate in the thirdquarter of 2018 was 6.1% — tied for the highest growthrate in the last 15 quarters — according to Reagan Consulting's Organic Growth and Profitabilitystudy.
|All lines of business contributed to the strongest nine-monthgrowth since September 2013. Commercial lines led industry growthat 6.8%, surpassing group benefits growth for the first time since2014. Group benefits continued strong growth at 6.3% and personallines — at 3.8% — posted its highestthird-quarter growth rate since Reagan began the OGP survey in2008.
|Related: IVANS Q3 results: BOP and workers' compensationfalter
|Betting on growth
The strong growth performance in the third quarter has beenaccompanied by significant investment activity in the insurancedistribution space. Three recent acquisitions wereannounced at record valuations: the $6.3 billion acquisition of JLT by Marsh &McLennan; the $700-plus million acquisition of Hays Companies by Brown &Brown; and the minority investment in HUB by Atlas Partners ofToronto, Ontario.
|"Sustained organic growth and healthy industry fundamentals haveled to some big bets being placed on both the acquisition andInsurTech fronts," Harrison Brooks, vice president ofReagan Consulting, said in a press release.
|Despite the bullish outlook, Reagan leadership did express onenote of caution around agency profitability regarding EBITDA(earnings before interest, tax, depreciation and amortization).EDITDA margins declined slightly from last year, and it appearsthat contingent income, which dropped to 8.0% of revenue in 2018from 8.6% of revenue in 2017, was the primary driver.
|Related: Megadeals push global insurance M&A to highestlevels since financial crisis
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