Insurance brokers experience growth in per-share value YTD and outperform broader indices
Last week, we chose to suspend Today’s ViewPoint to give space for the national events and conversations that have far reaching implications for our country. As an organization we wanted to let those voices that should rise above our own be heard. We also believe we have a responsibility to continue to provide you with industry insight and perspective. It has been an incredibly difficult time both individually and as a society. As a firm, we remain committed to listening, learning, and being steadfast in our support of diversity, inclusion, and equality. We understand people still have jobs to do despite everything going on around us. We are resuming Today’s ViewPoint to help you do that job the best you can and continue to provide perspective, analysis and information for the insurance brokerage industry.
We wanted to start this week by reinforcing the strength of the insurance industry. MarshBerry believes the insurance distribution industry has superior fundamentals and is very resilient relative to other industry sectors. Insurance remains one of the largest global industries and plays a significant role in identifying, quantifying and mitigating risk within the world’s economies. While other indices are down on a year-to-date basis, the per-share value of insurance brokers grew. Looking at the data below, the market is validating the strength of the insurance industry.
The 2019 calendar year was arguably the best year in the history of the insurance distribution system. The stock performance for publicly traded insurance brokers since the end of 2019 outperformed both the S&P 500 and the Dow Jones Industrial Average (“DJIA”) as of last Friday. The DJIA and the S&P 500 were down about 5% and 1%, respectively, since December 31, 2019. At the same time, MarshBerry’s Insurance Broker Index (comprised of six of the publicly traded brokers) was up slightly more than 1%. With consistent year over year revenue growth for the last couple of decades, including the ’08 –’09 recession, high CAT years, and other headwinds, the performance of the insurance distribution sector has remained solid and reinforces our opinion that this asset class is superior to most other industry sectors.
In previous Today’s ViewPoint articles calls to action around sales enablement, technology, innovation, organic growth, and firm value have all been presented. Peer industries have been forced to reinvent, modernize and digitize business models, innovate and pivot to survive. For the insurance brokerage industry to remain ahead of the curve, it must also continue to adopt these mindsets to stay relevant and resilient in a world that is requiring an ever-increasing pace of change. A contributing factor to viability is that the P&C industry is experiencing a “hard market” from rate increases. The implications of P&C rate increases will be expanded upon in Tuesday’s edition of Today’s ViewPoint.
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Sources: AON – Aon plc; AJG – Arthur J. Gallagher & Co.; BRO – Brown & Brown, Inc.; BRP – Baldwin Risk Partners; MMC – Marsh & McLennan Companies, Inc.; WLTW – Willis Towers Watson Public Limited Company
This post has been prepared by Marsh, Berry & Co., Inc. and is not intended to provide investment recommendations on any company. It is not a research report, as such term is defined by applicable laws and regulations, and it does not contain sufficient information upon which to make an investment decision. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. These materials are based solely on information contained in publicly available documents and Marsh, Berry & Co., Inc. has not independently attempted to investigate or to verify such information.
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