FOR IMMEDIATE RELEASE
CONTACT: Brian McNeely, Reagan Consulting, 404.869.2523, firstname.lastname@example.org
Reagan Consulting Reports Strong Organic Growth to Start 2018
All Lines of Revenue Surpass Expectations; Momentum to Continue
ATLANTA (May 9, 2018) — Insurance agencies and brokerage firms recorded the second consecutive quarter (Q) of accelerating growth, and their outlook for the remainder of 2018 continues to be optimistic.
All lines of business experienced the highest organic growth since 2015 in the first quarter of this year (Q1), reports Reagan Consulting, a management consulting and merger-and-acquisition advisory firm for the insurance distribution system.
Overall, first-quarter agency organic growth reported by the firms participating in Reagan Consulting’s Organic Growth and Profitability (OGP) Survey rose to 5.6%, representing a 44% increase over Q1 2017 and a 24% increase over Q4 2017.
Personal lines provided the “biggest surprise,” according to Brian McNeely, partner at Reagan Consulting. It was the highest Q1 performance — at 3.9% — in the survey’s history. “We believe this is driven, at least in part, by hardening in the personal auto market in certain states as well as agents and brokers continuing to focus on high-end personal lines, which tends to grow faster than main street personal lines,” says McNeely.
The group benefits category has experienced the strongest growth, coming in at 7.3%, which represents a 40% increase over Q4 2017. Reagan analysts attribute the growth to the continued escalation of healthcare costs and brokers’ ongoing investment in additional producers and client-facing resources.
In contrast to overall growth, earnings before interest, taxes, depreciation and amortization (EBITDA) margin lowered slightly to 26.9% when compared to the 27.6% EBITDA margin reported in Q1 2017. “Given the consistency of contingent income versus Q1 2017 combined with the organic growth increase, we would have expected the EBITDA margins to increase in Q1 of 2018,” says McNeely.
He also explains that the Q1 2018 operating profit was down 0.5% to 9.9%, seeming “to confirm a concern that many of our clients have voiced in this year’s valuation conversations — brokers are feeling margin pressure.” Reagan Consulting does not expect that pressure to lessen and predicts EBITDA margins will fall slightly in 2018 versus 2017.
Reagan Consulting has conducted its quarterly survey of agency growth and profitability since 2008, using confidential submissions from more than 150 midsize and large agencies and brokerage firms. Nearly half of the industry’s 100 largest firms regularly participate in the survey. The OGP study is the industry’s preeminent survey of midsize and large privately held brokers.
For further information and commentary, contact Brian McNeely at Reagan Consulting, 404.869.2523, bmcneely@ReaganConsulting.com.
Each participating agency receives a customized, confidential report of its performance compared with the overall survey results, along with Reagan’s quarterly commentary of industry trends affecting agents and brokers. For information on participating in the OGP survey, contact Michelle Appelbaum at 404.233.5545 or michelle@ReaganConsulting.com.
About Reagan Consulting: Reagan Consulting is a management consulting firm providing strategic consulting, valuation, and merger-and-acquisition (M&A) services to the independent insurance distribution system. The firm’s services for insurance agents and brokers, bank-owned agencies and other participants in the insurance distribution marketplace include: appraisals of fair market value, mergers and acquisitions advisory, ownership perpetuation planning, strategic planning facilitation, key employee compensation and equity plan design, and agency performance benchmarking. Reagan Consulting co-developed the well-known Best Practices Study and produces the quarterly Organic Growth & Profitability benchmark survey.
Reagan Consulting: 3495 Piedmont Road, NE, Building 10, Suite 920, Atlanta, Georgia 30305
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