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Agent Study

Posted on 18 Feb 09

Reagan Consulting announced it is launching its second quarterly Organic Growth & Profitability (OGP) Survey—providing a new national standard for these two key value drivers among large agencies and brokerages across the U.S.

The first study was conducted in late 2008 to reflect the first nine months of last year; this next survey will reflect full-year 2008 results.

“While there is quarterly information available on these metrics for a small number of public brokers, there is no standard for the other 99% of the industry,” says Kevin Stipe, a Reagan Consulting partner and the study’s leader. “In today’s tumultuous marketplace, agency leaders are hungry for meaningful, real-time performance data. Our goal is to provide every large agency in the U.S. with a quarterly report enabling its leaders to understand exactly how they measure up to their peers.”

The first study accessed information from 109 insurance brokerages with a median annual revenue of more than $15 million. For context, the study also provides comparisons to results of publicly traded brokers Aon, Arthur J. Gallagher, Brown & Brown, Marsh and Willis.

The third-quarter 2008 study offers some compelling findings:

  • Industry data indicates that large private brokerage organic growth rates exceeded public brokerage growth rates.
  • About 42% of surveyed firms indicated that organic growth was negative during the first nine months of 2008.
  • Only 8.3% of firms surveyed reported double-digit organic growth (e.g., more than 10%).
  • To be a top-25% performer nationwide required organic growth of 5.9% or more.
  • Employee benefits was the fastest growing line of business (9.5%) for study participants.
  • On average, the public brokerages reported a higher EBITDA margin (Earnings Before Interest Taxes Depreciation and Amortization divided by revenues) than study participants (22.6% vs. 20.3%).
  • To be a top-25% performer nationwide required an EBITDA margin of 25.5% or higher.

    About Reagan Consulting

    Atlanta-based Reagan Consulting is a leading financial and management consulting firm specializing in valuation, strategy and M&A for large, privately held brokers. Reagan Consulting also provides thought leadership to the banking and insurance industries through perennial research, seminars and other industry forums.