Large and mid-sized agencies and brokerage firms enjoyed a six-year high in revenue growth and profitability in the fourth quarter of 2013, according to Reagan Consultings quarterly Organic Growth and Profitability survey.
Median organic growth for independent agents and brokers in 2013 was 6.2%, up from 6.1% in 2012, while EBITDA margins jumped to 19.3%, up from 18.4% in 2012.
Rule of 20 scores were 16.5, and the top 25% of brokers all exceeded 20 for the first time since Reagans OGP survey began in 2008.
The consulting group uses the rule of 20, the sum of an agencys organic growth rate and one-half its EBITDA margin, to measure agency value creation. An agency with a sum of 20 or more is considered to be driving strong shareholder returns.
Agents and brokers have capitalized on a firming market, a recovering economy and new business initiatives to make large strides forward in performance and shareholder returns, says Kevin Stipe, president of Reagan Consulting.
More growth
Meanwhile, Marsh & McLennan said Tuesday its revenue for the fourth quarter of 2013 came in at $3.12 billion, up 4% from the same period in 2012. The firms net income for the quarter grew 17% year-over-year to $303 million.
While fourth quarter results for 2013 were notable, Stipe cautioned that future improvements could slow.
We do not necessarily think that brokers will go backwards, but we are wondering if brokers can maintain their impressive run of consistently improving results, he says.
