Zacks Industry Outlook Brown and Brown, Marsh & McLennan, Arthur J. Gallagher & Co and Willis Towers Watson

For Immediate ReleaseChicago, IL – December 31, 2024 – Today, Zacks Equity Research Brown and Brown, Inc. BRO, Marsh & McLennan Companies MMC, Arthur J. Gallagher & Co. AJG, and Willis Towers Watson Public Limited Company WTW.4 Stocks to Watch From the Prospering Insurance Brokerage IndustryIndustry: Insurance - BrokerageLink to article: https://www.zacks.com/commentary/2389272/4-stocks-to-watch-from-the-prospering-insurance-brokerage-industryBetter pricing, prudent underwriting, rising demand for insurance products and global expansion have been driving revenues of Zacks Insurance Brokerage industry players. The fast-paced consolidations in this traditionally fragmented industry are expected to benefit Brown and Brown, Inc., Marsh & McLennan Companies, Arthur J. Gallagher & Co., and Willis Towers Watson Public Limited Company.Increased digitization should help the industry improve its basis points, scale and efficiencies.About the Insurance Brokerage IndustryThe Zacks Brokerage Insurance industry comprises companies primarily offering insurance and reinsurance products and services. Insurance brokers serve as intermediaries between clients and insurance providers, act on behalf of their clients and offer advice, keeping in mind clients' interests, against brokerage fees. Their business is directly linked with clients’ level of business activity. Some of these companies also provide risk management, third-party administration and managed healthcare services. Per a report by Mordor Intelligence, the insurance brokerage market size is anticipated to reach $320.55 billion and $381.81 billion in 2024 and 2029, respectively, at a five-year (2024-2029) CAGR of 3.56%. Accelerated digitalization should help in the smooth functioning of the industry.3 Trends Shaping the Future of the Insurance Brokerage IndustryIncreased Demand for Products to Drive Revenues: The operational results of the industry players are dependent on clients’ level of business activity, which depends on the extent of economic activity in the industries and markets they serve. Thus, growth of insurance brokers depends on the demand for insurance products driven by increased awareness. Keeping this in mind, industry players are expanding globally, cross-selling products, improving pricing, tightening underwriting standards and designing products that are more appealing to customers and match their risk appetite. Better pricing ensures higher commissions for the industry players.An increase in the aging population is driving the demand for retirement benefit products, while the rising population of baby boomers and millennials and increasing awareness are boosting the demand for medical insurance, life insurance, accidental insurance and other forms of insurance. Per a report by Mordor Intelligence, the growing demand for insurance policies among people drives growth of the insurance brokerage market.Mergers and Acquisitions: The insurance brokerage industry is witnessing fast-paced consolidation.  Per a report by Mordor Intelligence, the insurance brokerage market is driven by persistently growing mergers and acquisitions. The industry has been traditionally fragmented, with a number of small players. One of the factors driving mergers and acquisitions is that the companies need to specialize in their businesses. Some other factors driving mergers and acquisitions are the interest of private equity firms in this sector, growing competition and slow organic growth. Per a report by Willis Towers Watson’s Quarterly Deal Performance Monitor, merger and acquisition activity is projected to get momentum in 2025, riding on improved economic conditions, curbed inflation, technology-driven deals and stabilized interest rates.Increased Adoption of Technology: Insurance brokers are adopting digital tools for improved policy management, claims processing, and better customer interactions. Insurance companies are teaming up with insurtechs firms to accelerate the integration of innovative technologies like artificial intelligence (AI), machine learning, blockchain, and IoT. The increased use of data analytics and AI integration enables brokers to offer personalized services, boost operational efficiency, improve risk assessment, and streamline operations.Accelerated digitization, robotic process automation, cognitive intelligence and blockchain should help insurers curb operational costs and aid margin expansion. This digital shift is expected to drive premium growth and boost efficiency. Per Deloitte Insights, the insurance players are estimated to write approximately $4.7 billion in annual global premiums from AI-related insurance, at a compounded annual growth rate of 80% by 2032. However, expenses associated with such investments increase costs and, in turn, the expense ratio.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Insurance - Brokerage industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #80, which places it in the top 32% of more than 249 Zacks industries.The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, signifies encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are upbeat about this group’s earnings growth potential. The industry’s earnings estimate has moved up 2.6% for 2024 in a year.Before we present a few insurance broker stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and valuation picture.Industry Outperforms Sector and S&P 500The Insurance Brokerage industry has outperformed its sector and the Zacks S&P 500 Composite year to date. The stocks in this industry have collectively gained 28.5% year to date compared with the Finance sector’s increase of 18% and the Zacks S&P 500 Composite’s increase of 26.1% over the same period.Current ValuationOn the basis of a trailing 12-month price-to-book (P/B), commonly used for valuing insurance stocks, the industry is currently trading at 6.86X compared with the Zacks S&P 500 Composite’s 8.75X and the sector’s 3.97X.Over the past five years, the industry has traded as high as 8.17X, as low as 4.51X and at the median of 6.84X.4 Insurance Brokerage Stocks to Keep an Eye OnWe are presenting one stock from the space currently carrying a Zacks Rank #2 (Buy) and three stocks carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Brown & Brown: BRO, with a market capitalization of $29.42 billion and headquartered in Daytona Beach, FL, markets and sells insurance products and services primarily in the United States, as well as in London, Bermuda and the Cayman Islands and carries a Zacks Rank #2. New businesses, better customer retention, premium rate increases across the majority of business lines, strategic acquisitions and a strong financial position should continue to drive growth for this insurer.Earnings of Brown & Brown have grown 18.4% in the past five years, better than the industry average of 13.2%. The expected long-term earnings growth rate is 11.6%. The Zacks Consensus Estimate for 2025 earnings indicates a year-over-year increase of 9.6%. BRO delivered a trailing four-quarter earnings surprise of 6.87%, on average. The consensus estimate for 2025 earnings has moved 2.2% north in the past 60 days. The stock has gained 44.7% year to date.Marsh & McLennan Companies: New York-based Marsh & McLennan, with a market capitalization of $104.84 billion, provides advice and solutions to clients in the areas of risk, strategy and people worldwide. This insurance broker is well-poised to grow on significant investments and acquisitions made within its operating units, product launches, enhanced digital capabilities and new businesses. It carries a Zacks Rank #3 currently.Earnings of Marsh & McLennan have grown 13% in the past five years. The expected long-term earnings growth rate is 9.6%. The Zacks Consensus Estimate for 2025 earnings indicates a year-over-year increase of 8.2%. The consensus estimate for 2025 earnings has moved 0.2% north in the past 60 days. This insurance broker delivered a trailing four-quarter earnings surprise of 2.67%, on average. The stock has gained 12.7% year to date.Arthur J. Gallagher & Co.: Headquartered in Itasca, IL, Arthur J. Gallagher, with a market capitalization of $71.57 billion, is the world’s largest property/casualty third-party claims administrator and the fourth largest among insurance brokers (based on revenues). AJG is poised to benefit from the growing contribution of its Brokerage and Risk Management segments. This, in turn, is driving organic revenues.Given the number and size of its non-U.S. acquisitions, this Zacks Rank #3 insurer expects an increase in international contribution to total revenues. New business production and retention bode well for consistent growth. AJG estimates organic growth to be 7.5% in the Brokerage segment, while the same for the Risk Management segment is expected to be 9%. For 2025, Arthur J. Gallagher estimates organic growth between 6% and 8% in the Brokerage segment.Earnings of Arthur J. Gallagher have grown 20.7% in the past five years. The Zacks Consensus Estimate for 2025 earnings indicates a year-over-year increase of 12%. This insurance broker delivered a trailing four-quarter earnings surprise of 1.16%, on average. The stock has gained 27.5% year to date.Willis Towers Watson: Based in London, the United Kingdom, Willis Towers, with a market capitalization of $31.86 billion, is a leading global advisory, broking and solutions company. Growing healthcare premiums, increased consulting work and software sales, strategic buyouts and effective capital deployment bode well for growth. Willis Towers’ growth strategy focuses on core opportunities with the highest growth and returns. This Zacks Rank #3 insurer innovated and developed its offerings in markets and boosted its abilities in faster-growth markets.Earnings for this insurance broker have grown 8.2% in the past five years. The expected long-term earnings growth rate is 10.1%. The Zacks Consensus Estimate for 2025 earnings indicates a year-over-year increase of 9%. WTW delivered a trailing four-quarter earnings surprise of 7.34%, on average. The consensus estimate for 2025 earnings has moved 0.1% north in the past 60 days. The stock has gained 31.1% year to date.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marsh & McLennan Companies, Inc. (MMC): Free Stock Analysis Report Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report Brown & Brown, Inc. (BRO): Free Stock Analysis Report Willis Towers Watson Public Limited Company (WTW): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks