Fitch Sees Growth for U.S. Brokers in 2011

Fitch Ratings released its annual analysis of the U.S. insurance brokerage industry. Fitch expects that prospects for revenue and earnings growth in the U.S. insurance broker market in 2011 will continue to be dampened by competitive fundamentals of the property/casualty insurance market, and limited increases in demand for broker services in the current economic environment. However, credit trends are expected to be stable or modestly favorable in 2011.

Published on February 2, 2011

Over the next 12 months, Fitch expects brokers' reported revenue growth to be modest. Organic growth opportunities will be challenged by weaker property/casualty insurance pricing, which in turn suppresses commission-based brokerage revenues. Non-organic growth will be constrained by a shrinking supply of acquisition targets of a size that would significantly augment the acquirers' total revenue streams.

Fitch's rating outlook for U.S. insurance brokers is stable, based on Fitch's expectation that credit trends to be stable or modestly favorable in 2011, despite the challenges mentioned above. Specifically, consolidated operating margins, EBITDA to total interest expense, and debt to EBITDA are likely to remain consistent with investment-grade debt ratings. Fitch notes that while performance over time varies by company for each of these measures, the brokers have generally posted fairly solid results on these benchmarks over the past several years, despite an unfavorable operating environment.

The full report '2011 Outlook: U.S. Insurance Broker Industry ' is available on the Fitch web site at www.fitchratings.com. The report further discussesFitch's rationale for its Rating Outlook for the U.S. Insurance Brokers, assesses the key risk factors that will affect industry performance in the coming year and provides Fitch's outlook for 2011 industry financial results.

Additional information is available at www.fitchratings.com.