"Sustained organic growth and healthy industry fundamentals have led to some big bets being placed on both the acquisition and InsurTech fronts," Harrison Brooks, vice president of Reagan Consulting, said in a press release. (Photo: Shutterstock)
Independent insurance agents and brokers have cause to celebrate as the industry organic growth rate in the third quarter of 2018 was 6.1% — tied for the highest growth rate in the last 15 quarters — according to Reagan Consulting's Organic Growth and Profitability study.
All lines of business contributed to the strongest nine-month growth since September 2013. Commercial lines led industry growth at 6.8%, surpassing group benefits growth for the first time since 2014. Group benefits continued strong growth at 6.3% and personal lines — at 3.8% — posted its highest third-quarter growth rate since Reagan began the OGP survey in 2008.
Related: IVANS Q3 results: BOP and workers' compensation falter
|Betting on growth
The strong growth performance in the third quarter has been accompanied by significant investment activity in the insurance distribution space. Three recent acquisitions were announced 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 of Toronto, Ontario.
"Sustained organic growth and healthy industry fundamentals have led to some big bets being placed on both the acquisition and InsurTech fronts," Harrison Brooks, vice president of Reagan Consulting, said in a press release.
Despite the bullish outlook, Reagan leadership did express one note of caution around agency profitability regarding EBITDA (earnings before interest, tax, depreciation and amortization). EDITDA margins declined slightly from last year, and it appears that contingent income, which dropped to 8.0% of revenue in 2018 from 8.6% of revenue in 2017, was the primary driver.
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Denny Jacob
Denny Jacob is an associate editor for NU PropertyCasualty360. Contact him at [email protected].
