Consolidation continues to be a major factor in the excess and surplus lines market as companies seek economics of scale.

In December, Chicago-based Ryan Specialty Group L.L.C. said it completed the merger of its R-T Specialty L.L.C. unit and Kansas City, Missouri-based Westrope.

The same month, Charlotte, North Carolina-based AmWINS Group Inc. reached agreement to acquire E&S wholesale broker Bliss & Glennon Inc. based in Redondo Beach, California.

“There's continued consolidation in the wholesale distribution companies that distribute surplus lines products in America,” said Randall G. Goss, chairman and CEO of Dallas-based wholesaler U.S. Risk Insurance Group Inc. “The large firms are getting larger, and I think there are fewer small firms today that are able to compete in this environment.”

Joel Cavaness, president of Itasca, Illinois-based managing general agent Risk Placement Services Inc., said factors are combining to drive mergers, including the aging of baby boomer owners.

“The scale of some of the larger wholesalers and their ability to compete in some areas has driven a desire for people to merge with bigger firms or other firms” to access resources they do not have, he said.

“Right now in the cycle is probably a good time to sell” because profits “are probably at a fairly high level,” he said.

Jamie Crystal, executive vice president of New York-based brokerage Crystal & Company, said while wholesalers in the past would develop relationships with retail brokers and “then kind of wait for the phone to ring and risks to come in,” today surplus lines brokers are more strategic in choosing retail brokers “who can support them.”

“There are still a lot of independent organizations out there,” said Michael D. Miller, president and chief operating officer of Scottsdale Insurance Co. in Scottsdale, Arizona.

However, Robert J. Greenebaum Jr., Chicago-based executive vice president of the casualty group practice at the Swett & Crawford Group Inc., said while the concentration of wholesalers has not caused consternation among insurers so far, that reaction “may be one big acquisition away.”