Snapshot: mega-brokers’ full-year results

Comparison of global brokers’ full-year 2011 results (scroll across to see full table or download, right)

Analysis

• Willis had the worst year of the big four US-listed brokers, as rising costs and relatively low revenue growth combined to cut its operating profit. As such, it was the only one of the top four to report a reduction in operating profit. In addition, its profit margin has gone from being the best of the bunch last year to third, with only Arthur J Gallagher posting a worse profit margin.
• The star of the show by every measure is the risk and insurance services division of Marsh & McLennan Companies (MMC), which includes insurance broker Marsh and reinsurance broker Guy Carpenter. Its 9.3% increase in profit margin was top of the class, as was its organic growth, operating profit increase and profit margin.
• Aon, the world’s biggest insurance broker by revenue, also had a good year. MMC only narrowly beat Aon in the profit margin stakes and a 10% increase in profit is not to be sniffed at in difficult times. Even so, Aon should be concerned for its top position as MMC is snapping at its heels on both revenue and profit.
• The smallest broker of the bunch, acquisitive Arthur J Gallagher, saw the biggest increase in revenues with 16.1%, but its 2.9% organic commissions and fees growth shows that most of this increase has come through buying other companies. It completed the acquisition of UK broker Heath Lambert during 2011 and has acquired several firms in its native USA.
• The biggest two brokers, Aon and MMC, appear to have been more adept at squeezing costs out of their operations than Willis or Gallagher, judging by their profit margins. However, Willis’s restructuring and Gallagher’s acquisitive streak are likely to have played a strong role in keeping their margins down.