A Look at Insurance Brokers: Q1 Earnings Preview

Analysts at investment banking firm Keefe, Bruyette & Woods offer their views on what to expect from some brokers they follow as first-quarter financial results are announced.

All Q1 2013 figures are estimates provided by KBW.  

Aon plc

Reporting date: 4/26 (conference call)

What to look for:

• Commentary on demand for defined benefit consulting services as clients transition to defined contribution models.
• Update on brokerage margin expansion outlook.
• Discussion of trends in the European economy and the impact on demand for consulting services.

Revenue Growth

Q1 2012: 3%

Q1 2013E: 2.7%

Organic Revenue Growth

Q1 2012: 4.2%

Q1 2013E: 3.3%

Operating Earnings Per Share

Q1 2012: $0.97

Q1 2013E: $1.11

KBW Analyst: Meyer Shields

Arthur J. Gallagher & Co.

Reporting date: 4/30 after close

What to look for:

• Update on investment in Chem Mod, which provides technologies that can assist coal-fired power plants in meeting regulatory compliance while minimizing impact on operations.
• Commentary on workers' compensation rate increases impacting.
• Discussion of M&A financing (namely cash vs. stock).

Revenue Growth

Q1 2012: 22.4%

Q1 2013E: 17.0%

Organic Revenue Growth

Q1 2012: 3.2%

Q1 2013E: 5.0%

Operating Earnings Per Share

Q1 2012: $0.26

Q1 2013E: $0.23

KBW Analyst: Meyer Shields

Marsh & McLennan Companies, Inc.

Reporting date: 5/2 (conference call)

What to look for:

• Updates on revenue expectations for recently launched Mercer health exchange.
• Expectations for margin improvement in 2013, following 2012's improvement.
• Discussion on Europe's impact on consulting-segment revenues.

Revenue Growth

Q1 2012: 5.8%

Q1 2013E: 2.8%

Organic Revenue Growth

Q1 2012: 6.6%

Q1 2013E: 4.2%

Operating Earnings Per Share

Q1 2012: $0.63

Q1 2013E: $0.69

KBW Analyst: Meyer Shields

Willis Group Holdings plc

Reporting date: 4/30 after close

What to look for:

• Discussion on profitability initiatives to address investor concerns following CEO transition.
• Expectations for North America organic revenue growth in 2013 and beyond.
• Plans to implement health-exchange strategy, as Willis is the only global broker that has yet to announce a strategy.

Revenue Growth

Q1 2012: 0.6%

Q1 2013E: 3.4%

Organic Revenue Growth

Q1 2012: 2.2%

Q1 2013E: 5.3%

Operating Earnings Per Share

Q1 2012: $1.32

Q1 2013E: $1.34

KBW Analyst: Meyer Shields