The world's largest brokers are fast becoming a smaller fraternity.

Unlike 1995, when consolidation in the brokerage industry left the top brokers relatively intact, five of the world's 20 largest brokers have been absorbed by other brokers in the past 12 months.

Aon Group Inc. alone has snapped up three of those companies: Alexander & Alexander Services Inc., Bain Hogg Group P.L.C. and Minet Group. Marsh & McLennan Cos. Inc. bought the other two: Johnson & Higgins and CECAR.

As a result of the widespread consolidation, and the growing gulf between the revenues of the world's largest brokers and their smaller competitors, Business Insurance this year is ranking the world's 10 largest brokers.

In 1995, the difference between the gross revenues of the top broker and 20th largest broker was a vast $3.65 billion. In 1996, that difference would be about $5 billion.

In fact, as we report in this issue, the 1996 revenues of the 10 largest brokers fall only about $216 million, or 1.5%, shy of the 1995 revenues for the entire Top 20 brokers.

The Top 10 generated pro forma combined gross revenues of $13.91 billion in 1996, up 37.7% over 1995 revenues without the acquisitions.

Aon by far saw the largest increase, a 129.5% gain, followed by M&M, up 44%, and Lambert Fenchurch Group P.L.C., up 39.5%.

Two brokers actually saw revenues decline compared with 1995 after they separated themselves from unrelated operations to focus on property/casualty brokerage: Acordia Inc.'s revenues fell 38.1%, while C.E. Heath P.L.C. saw revenues decline 24.4%.

The two brokers conspicuously absent from the merger frenzy of the past year-Sedgwick Group P.L.C. and Willis Corroon Group P.L.C.-posted relatively flat revenue growth.

While London-based brokers are feeling exchange rate pressure in 1997 as the pound sterling strengthens, the value of the pound was relatively steady between 1996 and 1995.

BI uses average annual exchange rates to convert foreign currencies into U.S. dollars. For example, the average value of the British pound was $1.56 in 1996, compared with $1.58 in 1995 and $1.53 in 1994.

The strength of the German mark, for example, was one factor behind Jauch & Huebener KGaA's failure to achieve the BI rankings. Although Jauch & Huebener's revenues gained 2.6% in its home currency between 1996 and 1995, when converted to dollars the company's revenues slid 2.3%.

Revenue gains for the Top 10 in the brokers' home currencies appears on page 4.

This year's report on commercial insurance brokers includes a directory listing 219 brokers-including the top 10-that reported a total of $17.9 billion in gross revenues for 1996. A year ago, 240 brokers were listed that generated $16.93 billion in revenues.

BI's 26th Annual Agent/Broker Profiles report, which begins on page 3, also includes:

Charts of the 100 largest brokers of U.S. business (page 3), the leading retail brokers in the United States (page 10) and a ranking of the Top 10 by revenue per employee (page 6).

An overview of current trends in the global commercial insurance brokerage business (page 3).

A report on compensation for the chief executives of the major publicly held U.S. brokers (page 14).

In-depth profiles of the world's 10 largest brokers (pages 18-50).

A directory of commercial insurance brokers, followed by a geographic index (pages 51-78).