Stable outlook predicted for brokerage sector in 2015

Stable outlook predicted for brokerage sector in 2015 | Insurance Business

Stable outlook predicted for brokerage sector in 2015
Moody’s expects a stable outlook for the global brokerage sector throughout 2015 and sees moderate growth for the sector in the next 12 to 18 months.

In the report, entitled: "Stable Outlook Amid Steady EBITDA Margins, But Risks Rise for Private Firms," Moody’s said they expect moderate growth in demand for insurance products and services will be partially offset by an increasingly competitive rate environment.

Benjamin Goldberg, a Moody's Analyst and author of the report, said the report looks at several different facets of the brokerage industry and sees a steady outlook.

"In addition to our macroeconomic forecasts, our outlook for the global insurance brokerage industry takes into account the sector's steady profitability and cash flows, as well as consistent demand for its products and services,"

"However, the brokers' organic growth will be constrained by decelerating P&C pricing trends."

The report notes that the industry has grown moderately over the last 12 months but “organic revenue growth will be lower than in recent years, given the growing competition among commercial insurance carriers in property lines, slowing rate increases across casualty lines and double-digit rate declines in property catastrophe reinsurance.

“Despite this slower organic growth, the rating agency expects brokers' EBITDA margins to remain relatively stable, generally in the mid- to high 20% range.”

With the number of acquisitions rising throughout 2014, Moody’s sees this trend of consolidation continuing into the New Year.