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U.S. insurance broker profitability to persist in 2017, be supplemented by organic revenue growth: Fitch


December 2, 2016   by Canadian Underwriter


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Fitch Ratings expects insurance broker earnings and revenue south of the border to likely to modestly improve in 2017 compared to the first nine months of 2016.

Financial charts showing growing revenue on touch screen“In 2017, Fitch expects brokers will continue to supplement organic revenue growth through selective acquisitions, including diversification efforts in employee benefits and data analytics,” the rating agency notes in its 2017 U.S. Insurance Broker Outlook.

Gretchen Roetzer, director of Fitch Ratings, says that in 2017, the company “expects brokers will continue to supplement organic revenue growth through selective acquisitions, including diversification efforts in employee benefits and data analytics.”

Fitch sees limited potential for rating changes over the next 12 to 18 months, despite expecting modest improvement in some credit fundamentals in 2017, the company statement notes. The firm further anticipates broker industry credit fundamentals to remain solid in 2017.

“The fundamental sector outlook is stable as profitability remains favourable despite revenue pressure,” Fitch Ratings notes. “Continued flat or declining premium rate changes in most commercial insurance segments and a soft reinsurance market will likely persist in 2017, pressuring brokers organic growth,” the statement adds.

“Revenues from diverse product and geographic platforms including cyber risk insurance and benefits consulting should help offset these headwinds.”

Related: Revenue, earnings growth for U.S. brokers likely to improve modestly in 2014: Fitch