Newsletter Sign-up

By STEVE YAHN, who has written for and edited national publications for more than 30 years

Looking at the competitive landscape for 2010, CEOs at small to midsize insurance brokerages companies are uniformly optimistic about financial prospects, after most of them were in a growth holding pattern last year.

Added Marcon: "We were able to do all of that while producing significant new business, as well as expanding our operating margin from its 2008 level. If only renewal rates and exposure levels would have cooperated, 2009 could have been a record year us."

Perhaps focusing on a niche business was the way to go.

Bonney Hebert, president of Boston-based Academic Risk Resources & Insurance LLC, which specializes in working with higher education clients, said her firm saw growth in business in 2009 and added employees to support it. The firm's employee base grew 15 percent, property/casualty insurance premium grew by 26 percent, and the student health insurance premium grew by 33 percent.

Stu Cohen, president of his own Somers Agency in Somers, NY, observed: "As a direct result of our becoming well known as a specialist in the marketplace for small real estate properties, we have experienced double-digit growth. We expect to continue growing at the same rate in 2010 and beyond."

Or perhaps success also came to multiline brokerages with regional focus. Unlike many other firms, 2009 was also a "strong" year for California-based Barney & Barney, said Paul Hering, managing principal at the firm.

"The firm's revenues grew by more than 13 percent to $71.5 million," Hering figured.

2010

For many of these same firms, maybe for many of the same reasons, 2010 looks even brighter.

Barney & Barney is projecting a 10 percent growth rate in 2010, according to Hering.

"While we don't see any hardening in the P/C sector in general, it does seem that we have flattened out," observed Hering. "We think the outlook for the retail sector of our business is promising. We continue to invest in talent, and that is helping to drive revenue."

"(Our) growth will continue in 2010," observed Hebert. "Our growth strategies this year will primarily be focused on development of cross-selling opportunities, new product development in response to clients' needs, and continuing to market our expertise in service delivery to the educational and nonprofit sector."

At San Mateo, Calif.-based EPIC, co-founder and CEO Dan Francis said: "Despite the continuing challenges presented by both the economy and a soft insurance market, there is tremendous opportunity for growth. We believe EPIC is poised for an excellent year."

TOUGH CONDITIONS DO PERSIST

But as Francis noted, it's not peachy keen in 2010 just yet. And most brokerage leaders are aware that conditions won't be swinging positive anytime soon.

John Neace, chairman of Louisville-based Neace Lukens, said, "I see the property and casualty market as soft and don't expect it to firm up in 2010." He projects an overall growth rate in 2010 of 5 percent, up from 3 percent in 2009, for the Assurex Global Partner with 10 offices.

In 2009, his firm's property/casualty business was down 2 percent, while its employee benefits growth was at 8 percent, its small markets Maverick unit grew 7 percent and its new BeneSolve unit was up 100 percent.

Neace expects his firm to grow it employee benefits sector with modest, continuing increases in pricing.

Rob Cohen, chairman and CEO of Denver-based IMA Corp., said he expects his firm to be better both in terms of growth and profitability in 2010 after a good but not great year in 2009. "We were basically flat or maybe up a little last year," Cohen said. "Our bottom line was improved over 2008 but not significantly."

NEW EFFICIENCIES

Good or bad, 2009 seemed to teach these small and midsize brokerages how to be, if not lean, at least mean. Their optimism for 2010 isn't resulting from rosy glasses but from hard work and planning and a positive culture.

Said John Hahn, co-founder and president of EPIC: "Our financial outlook is extremely optimistic. The operational efficiencies we've achieved, our strong sales culture and the excellent partnership with our investor Stonepoint make for a 'bullish' outlook in 2010."

"As is the case with most companies," said Steve Johns, president of Waterford, MI-based L.L. Johns Associates, "we have learned a new discipline and diligence in watching our expenses, and we intend to carry that forward into 2010 and beyond. As revenues come back up, we will be a different company as a result of the lessons learned."

Johns, whose firm targets companies that own/operate one- or two-turbine aircraft for commercial use, added, "Despite a continuing soft market as we finished January 2010, we are optimistic about the opportunities that present themselves to us and we are expecting both customer base and revenue growth this year.

Operational efficiencies, niche markets, strong company cultures--these all obviously can power a firm through today's tough times, but a little faith doesn't hurt either.

As Roosevelt Haywood III, President/CEO of Gary, IN-based Haywood and Fleming Associates, said: "We look forward to another great year in our public-sector practice, and with the Chicago marketplace maturing for us, along with a continuation of the Lord's blessings, profits will be up as will be our spirits!"

February 1, 2010

Copyright 2010© LRP Publications