Reagan: Many Brokers' Growth Negative For First 3 Quarters

A poll of insurance brokers in the third quarter of 2008 found that nearly 42 percent of firms responding had negative organic growth during the first nine months of the year, according to an Atlanta-based consulting firm.

Reagan Consulting said the findings were contained in its first quarterly Organic Growth & Profitability Survey of insurance brokers and that it is already compiling another survey for full-year results.

Reagan said its first study accessed information from 109 insurance brokerages with median annual revenue of more than $15 million. The study, for context, also provides comparisons to results of publicly traded brokers Aon, Arthur J. Gallagher, Brown & Brown, Marsh and Willis.

The third-quarter 2008 study found large private brokerage organic growth rates exceeded public brokerage growth rates, Reagan said.

Only 8.3 percent of firms surveyed reported double-digit organic growth (e.g., more than 10 percent).

To be a top-25 percent performer nationwide required organic growth of 5.9 percent or more, according to the Reagan survey.

The study found employee benefits was the fastest growing line of business (9.5 percent) for study participants.

On average, the public brokerages reported a higher EBITDA margin (Earnings Before Interest Taxes Depreciation and Amortization divided by revenues) than study participants (22.6 percent versus 20.3 percent).

To be a top-25 percent performer nationwide required an EBITDA margin of 25.5 percent or higher, the study found

The firm promised its next study will provide "a new national standard" for key value drivers among large agencies and brokerages across the United States.

Kevin Stipe, a Reagan Consulting partner and the study's leader, said, "While there is quarterly information available on these metrics for a small number of public brokers, there is no standard for the other 99 percent of the industry."

He commented, "In today's tumultuous marketplace, agency leaders are hungry for meaningful, real-time performance data. Our goal is to provide every large agency in the U.S. with a quarterly report enabling its leaders to understand exactly how they measure up to their peers."

The firm said every agency or brokerage participating in its study receives a customized report detailing its performance in a variety of areas. Additional data and related articles and commentary will appear on www.reaganconsulting.com.

Mr. Stipe said one-third of the agents and brokers contacted for the first survey had provided their proprietary information for the study analysis, which he called a "remarkable turnout."

Reagan said agencies and brokerages with at least $5 million in annual revenues that are interested in participating in the fourth-quarter 2008 study should contact Shirley Lukens (shirley@reaganconsulting.com) no later than February 13. Agencies interested in future participation can contact Reagan at any time.