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Top P&C Brokers Ranked
A first-ever ranking of the world’s top 150 brokerage groups by revenues earned from commercial non-life (P&C) insurance has been calculated by London-based market research firm Finaccord.
The top 150 brokers earned total global revenues of $28.5 billion from commercial P&C activity — or 59 percent of the estimated $48.5 billion total global revenues in 2013, according to the firm.
Aon ranked at the top of the list, with commercial lines revenue of $6.1 billion worldwide, followed by Marsh at $5.1 billion.
Overall, the top 15 brokerage groups together earned revenues of $20.9 billion (or 43 percent) of the worldwide market.
Finaccord’s research also showed that across the world’s top 150 commercial non-life insurance brokerage groups, 67 (45 percent) were headquartered in the U.S., with a further 24 based in the U.K., 14 in France, 12 in Germany and eight in Canada.
“The strong presence of North American brokers in the ranking is primarily due to the huge size of the U.S. and Canadian commercial property and casualty markets, and the fact that brokers, including independent agents, dominate distribution in both the U.S. and Canada,” said Bernd Bergmann, a consultant at Finaccord.
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The Finaccord ranking of top 15 commercial non-life (P&C) insurance brokers by estimated commercial non-life broking revenues in 2013, in order, are:
- Aon: $6.1 billion
- Marsh: $5.1 billion
- Willis: $2.05 billion
- Arthur J. Gallagher & Co., $1.2 billion
- Wells Fargo Insurance Services: $960 million
- BB&T Insurance Services: $932 million
- HUB International: $932 million
- JLT Group: $878.6 million
- Lockton: $791 million
- Gras Savoye: $464.7 million
- USI Insurance Services: $390.4 million
- Brown & Brown: $382.4 million
- Alliant Insurance Services: $288.2 million
- Towergate: $267.7 million
- OAMPS Insurance Brokers: $210 million
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Mike O’Connor, CEO of Aon Risk Solutions in Chicago, said the magnitude, complexity and speed of risk are increasing everywhere.
“Even without the uncertainty that is caused by natural catastrophe, economic slowdown, or legislative and regulatory changes, companies are operating in a challenging environment where the pace of change is unparalleled,” O’Connor said.
“Protecting people and property has become more difficult,” he said. “Clients want solutions that will enable cross-border trade and alleviate security concerns in addition to solutions that will help them seek rapid recovery and capital after natural catastrophes.”
Bergmann noted that “a number of large brokers in North America are driving their growth through acquisitions, while the majority of their counterparts in Europe rely more on organic growth.”
Martin Mankabady, partner, Clyde & Co.
“I would say in terms of M&A activity, it is still quite patchy,” said Martin Mankabady, London-based partner in the insurance group at international law firm Clyde & Co. “We still haven’t hit the levels of activity we saw prior to the global financial crisis.
“In large part that is due to lack of confidence and market sentiment. The M&A market is particularly sensitive to that, and with the tensions at this moment in the world, plus talk of certain economies slowing down, all of that inevitably has an impact on M&A.”
He said “real pressure on income and margins being squeezed” has led some brokers to be active in the M&A market. Also driving M&As are brokers looking to achieve greater scale and what they hope will be more clout in the market.
“You can’t help but think that [the small and midsize] market should be ripe for consolidation — that could help them achieve some economies of scale and to potentially be more competitive,” said Mankabady.
“But we haven’t seen that wave of consolidation though there is some talk of it,” he said. “You may see a ripple of consolidation, but I’m not sure it will be a wave.”
He noted that “a number of sellers don’t want to sell unless they have to as they’re worried about not getting the right price, and buyers are worried about overpaying.”
Acquisitions Fuel Growth
Finaccord noted that 61 of the 150 brokers made at least one acquisition relevant to commercial brokerage business lines, and 10 made at least 10 such acquisitions between January 2012 and June 2014.
UK-based Towergate ranked first with 48 acquisitions, ahead of Arthur J. Gallagher & Co. and HUB International with 43 each, USI Insurance Services with 27 and AssuredPartners with 26.
“The global ranking may see some important changes in the future if competitors such as Arthur J. Gallagher & Co., HUB International and Towergate continue purchasing other brokers at such a rapid rate,” said Bergmann.
“In particular, given some of the acquisitions announced recently by Arthur J. Gallagher & Co, which include Noraxis Corp. in Canada and The Oval Group in the UK as well as OAMPS Insurance Brokers, the U.S.-based brokerage may substantially shorten the gap to Willis which is currently ranked third,” said Bergmann.
Commercial Lines Revenue Breakout
For a majority of the 150 brokers in the ranking, commercial non-life insurance is the most important source of revenues.
Of those 150 brokers, 22 of them earned more than 90 percent of their total revenue from commercial lines in 2013, while this activity made up at least half of the revenue for 122 brokers.
When ranked according to the proportion of commercial non-life brokerage revenues secured outside of their home market, Willis came in first with a figure of 90 percent in 2013.
Willis was followed by Howden Broking Group (80 percent); JLT Group (78 percent); and RKH Group (74 percent), meaning that the top four groups by this measure were all UK-based firms.
In total, nine groups earned more than 50 percent of their commercial non-life brokerage revenues from international markets in 2013.
Finaccord is a market research, publishing and consulting company specializing in financial services. It provides information about activity in the UK, Europe and globally.
