Insurance Times analyses the top global brokers’ performances so far in 2011

Results

Comparison of global brokers’ nine-month results (scroll across to see full table)

First nine months ($m)Revenues Change (%)Organic growth (%)Operating profitChange (%)profit margin (%)²
 20112010  20112010 20112010
Aon¹4,956.04,616.07.02.0969.0829.016.919.618.0
MMC¹4,729.04,278.011.05.0921.0747.023.319.517.5
Willis2,633.02,504.05.03.0485.0576.0-15.818.423.0
Arthur J Gallagher¹1,143.11,002.714.02.0178.6175.81.615.617.5

 

Analysis

  • Willis’s tough year shows up clearly when comparing nine-month 2011 performance with its peer group. It came bottom of the class for revenue growth and was the only broker to post a year-on-year drop in operating profit. On a more positive note, it enjoyed the second-best organic growth of the group.
  • Aon is the biggest of the four by broking revenue, but also generates the most profit per revenue dollar - its 19.6% operating profit margin beat the rest - but only just. MMC is snapping at its heels with a 19.5% margin. Willis’s profit margin dropped because of the reduction in operating profit, but so did Gallagher’s. This is because of a comparatively small growth in operating profit (1.6%) coupled with higher expenses.
  • Arthur J Gallagher has seen the biggest revenue boost of the four companies, but also has the biggest difference between actual and organic growth. This shows that the company’s main growth source has been acquisition. It has made several purchases during the year, but its biggest has been UK-based rival Heath Lambert. By contrast, the smallest gap between actual and organic growth was reported by Willis, indicating the company’s recent lack of acquisitions.
  • The prize for the biggest growth in operating profit goes to MMC’s broking segment, which comprises insurance broker Marsh and reinsurance broker Guy Carpenter. The company is narrowing the gap with Aon: what was a $82m difference in operating profit between the two companies a year ago is now only $48m.
  • If you consider organic growth to be the primary performance measure for a broker, MMC is out in front with 5%, while Aon and Gallagher are the joint lowest with 2%. However, there is little to choose between the brokers here as their growth rates are all in the low single digits - a clear sign of the tough operating environment, and an indicator that more acquisitions may be on the cards.
  • JLT overtook Willis to land second place in Insurance Times’s Top 50 UK Brokers this year. However it was not possible to compare JLT’s performance at the nine month stage as it did not reveal numbers in the third quarter.

1. insurance/reinsurance broking divisions only

2. Operating profit as a percentage of revenues

Source: company financial statements

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