Organic growth slows for agents, brokers in second quarter

Agent-broker organic revenue growth fell to 4% for the second quarter of 2016, which was the lowest level of growth since 3.3% in the second quarter of 2011, a survey says.

The 4% growth rate compares with the 5.9% growth rate reported for 2015's second quarter, according to the quarterly Organic Growth and Profitability survey issued by Atlanta-based Reagan Consulting Inc. Thursday.

Survey results are based on submissions from about 140 mid-size and large agencies and brokerage firms, with about half of the industry's 100 largest firms participating in the survey, according to Reagan. Firms completing the survey had a median revenue of about $18 million.

 

 

 

Among other survey results, the survey found commercial lines organic growth was 3.1% for this year's second quarter, compared with 5.1% for the first quarter. Employee benefits was the fastest-growing line of business, with organic growth of 6.2%, while personal lines grew 1.7%.

Profit margins decreased to 23.1% for the quarter as measured by earnings before interest, taxes, depreciation and amortization. This compares with a 24.6% margin for 2015's second quarter, and was the second lowest second-quarter pace since second-quarter 2012's 22.1%, according to the survey.

“The powerful headwinds of soft commercial lines premium rates and a muddling economy are even stronger in 2016, after blowing for more than a year,” Reagan principal Jim Campbell said in the statement.