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Fitch: U.S. Insurance Broker Rating Outlook Stable; Sector Outlook Revised to Stable for 2015Revenues and earnings for U.S. insurance brokers in 2015 are likely to modestly improve relative to levels reported in the first nine months of 2014, according to a new special report by Fitch Ratings. In the report, Fitch discusses key factors supporting the Stable Rating Outlook and Stable Sector Outlook for the insurance broker market. The report includes an analysis of trends in credit fundamentals and operating performance, and brief updates of recent events. Fitch's aggregation of GAAP financial data for a group of publicly traded brokers reveals that profit margins improved in 2014, particularly for the largest brokers, Aon plc and Marsh & McLennan Companies, Inc. Financial leverage increased for several organizations, particularly Arthur J. Gallagher & Co. and Brown & Brown, Inc. which completed large acquisitions funded in part with new debt financing. Interest coverage remains favorable and supportive of current rating levels. The Stable Rating Outlook reflects Fitch's expectation that prospective operating performance and balance sheet strength will remain supportive of the existing ratings for the brokers in Fitch's ratings universe. Despite anticipating modest improvement in key credit fundamentals in 2015, Fitch sees limited potential for rating changes over the next 12 - 18 months. The revision of the fundamental Sector Outlook to Stable from Positive recognizes a return to flat or declining premium rate changes in commercial insurance segments and a soft reinsurance market that will pressure brokers' organic growth in 2015. However, global brokers' revenues from diverse product and geographic platforms should partially offset these headwinds. Insured exposure growth from a more stable economic environment will also promote revenue expansion. The disruption caused by the rapidly evolving healthcare environment could still provide future opportunities for brokers' employee benefits and consulting businesses. The full report '2015 Outlook: U.S. Insurance Broker Industry' is available at 'www.fitchratings.com.' Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage' (Aug. 14, 2014); --'U.S. Insurance Broker Industry Sector Credit Factors' (May 4, 2012). Applicable Criteria and Related Research: 2015 Outlook: U.S. Insurance Broker Industry (Stable Credit Trends, Reduced Margin Expansion Ahead) http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=819448 Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139 U.S. Insurance Broker Industry Sector Credit Factors http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=677409 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. |
