Rating analysts at Fitch Ratings think the big players in the U.S. insurance brokerage market are doing fine, but they’re not sure about the brokers’ private exchange programs.
Gretchen Roetzer and colleagues mention private exchange programs briefly in a commentary on the companies’ 2016 outlook.
Fitch rates Aon PLC (NYSE:AON), Marsh & McLennan Companies Inc. (NYSE:MMC) and Willis Group Holdings PLC (NYSE:WSH). Fitch does not rate Arthur J. Gallagher & Co. (NYSE:AJG) or Brown & Brown Inc. (NYSE:BRO), but the analysts thought about them too, when they wrote the commentary.
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Median revenue at the five brokers was flat during the first three quarters. The median operating profit margin fell 19 percent, from 21 percent in 2014.
A soft reinsurance market and soft commercial insurance premiums could hurt the brokers’ revenue growth in the coming year, the Fitch analysts say.
“However, global brokers’ revenues from diverse product and geographic platforms, including health care and benefits consulting, should help offset these headwinds,” the analysts say. “Strong retention and insured exposure growth from a slowly improving economic environment will also promote revenue expansion.”