Independent insurance agents and brokers reported median organic growth of 5.8% for second-quarter 2014, down from 6.2% for the first quarter of 2014 and 6.9% for the second quarter of 2013, as measured by the Reagan Consulting Organic Growth and Profitability (OGP) survey.

The quarterly survey of 150 midsized and large agencies and brokerages found that profit margins, as measured by median EBITDA (earnings before interest, taxes, depreciation and amortization), increased to 24.5% in Q2 2014 from 24% in Q2 2013. Reagan Consulting pointed out that EBITDA margins are inflated by cash-basis contingent income received during the first half of the year and tend to decline during the second half. Thus, while second-quarter results are not a prediction of year-end EBITDA margins, the comparison to prior-year second-quarter results is revealing.

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Softening growth has not negatively affected profitability due to continued growth in contingent income, says Reagan partner Kevin Stipe, CPCU. “P&C contingent growth, for both commercial and personal lines, has delivered double-digit growth for two years. This has allowed for the impressive improvements in agency profitability,” he says.

Other key findings:

  • Commercial property-casualty growth led the way for the third consecutive year, with a Q2 growth rate of 6.6%, compared with 8.2% in Q2 2013.
  • Benefits growth, at 4.6%, declined from the 5.5% growth rate of Q2 2013.
  • Personal lines growth was 2.2% compared with 3.5% in Q2 2013.

For information on participating in the OGP survey, contact Michelle Appelbaum at 404-233-5545 or at [email protected].

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