Fitch Ratings has just announced the results of the analysis of their data for revenue and earnings increases for American insurance brokers in 2012, and that they have shown that their figures will likely equal or top those that were reported from January through September 2011.
However, they also indicated that the basic nature of competition of the marketplace for property & casualty insurance, and the lukewarm recovery of the global economy will continue to provide a struggle for more significant growth and operating performance.
Top-line increases may be able to take advantage of increases in prices within some specific business lines, which will improve the brokerage revenues from commissions over the upcoming year.
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Equally, Fitch also anticipates that the revenue growth from brokers will be relatively modest as a result of primarily flat rates within the wider market for commercial insurance in combination with a decreasing supply of acquisition targets that are of adequate size to boost the total revenues of the acquirer.
Fitch has forecasted favorable credit trends next year, greatly due to expected growth in earnings from margin expansion and gains in incremental revenue. Though performance over time isn’t standard across all companies and will vary, Fitch still predicts that the run rate performance for brokers will maintain a consistency with investment-grade debt ratings.
The report of Fitch Ratings’ findings is entitled the “2012 Outlook: U.S. Insurance Broker Industry”, and it is available in its entirety at the firm’s official website.