Independent insurance agents and brokers posted their highest-ever first-quarter profitability as measured by organic growth in 2014, Atlanta-based Regan Consulting said in a new report Monday.
Overall, first-quarter organic growth among agents and brokers reached 6.2% during the first quarter of 2014, a slight increase from the 6.1% posted in the first quarter of 2013, according to the Reagan Consulting “Organic Growth and Profitability Survey.”
Commercial property/casualty profitability grew 8.4% during first quarter 2014, up from 6.8% in the same period last year, while benefits growth rose by 5% vs. 3.7% in first quarter 2013, and contingent income jumped by 15.2%.
Profitability as measured by pro forma EBITDA — earnings before interest, taxes, depreciation and amortization — margins jumped 200 basis points to a first-quarter record of 29.9% in the first quarter of this year from 27.9% during the same period a year earlier. But despite the fact that EBITDA hit an all-time high for first-quarter profitability in 2014, EBITDA margins “are inflated by cash-basis contingent income and tend to decline throughout the year,” Reagan Consulting said in a statement accompanying the report.
The survey, which has been conducted quarterly since 2008, used confidential submissions from approximately 140 midsize and large agencies and brokerages. Roughly half of the industry’s 100 largest firms participated in the most recent survey, Reagan said in its statement, with median revenue of the firms completing the survey at around $15 million.
“Although still relatively strong by recent standards, broker organic growth rates were largely unchanged for the first quarter of 2014 from the prior-year first quarter,” Kevin Stipe, president of Reagan Consulting, said in the statement. “In addition to their confidence in continued growth, brokers also believe profit levels will remain strong, or perhaps even stronger than, those in recent years.”