Top 50 Brokers: Top six UK brokers peel away from revenue peloton with billions under belt

Aggregate brokerage across the firms included in the Top 50 Brokers this year has increased by an astonishing £2.6bn to reach £16.1bn – by far the biggest jump in overall revenue, measured in pound sterling or in percentage terms, since Imas/MarshBerry began compiling data for the Top 50 Brokers ranking more than 20 years ago.

Indeed, aggregate brokerage only exceeded £10bn for the first time in 2021 and 10 years ago, this figure was only £7.3bn.

So, what has driven this growth in an ultimately mature sector in a mature economy?

Well, it’s a combination of things. Industry consolidation means the big have got bigger and more of the industry is concentrated across the top 50 firms. However, this has been augmented by inflation and a positive rating backdrop driving higher commissions.

Perhaps more significantly, however, there are a number of larger UK brokers engaging in increasingly material levels of cross-border M&A – and these subsidiaries are now being captured in revenue figures.

Howden, The Ardonagh Group, BMS Group and PIB Group are the most obvious constituents this thinking applies to, but they are not the only consolidators to have really begun to target acquisitive growth in overseas markets.

This activity includes M&A in Ireland, where a very quick pace of consolidation has been set almost exclusively by UK-based firms or US brokers that have used their UK businesses to make acquisitions there and are subsequently reporting them in their UK entity accounts.

As such, over time, the Top 50 Brokers has begun to shift away from being an entirely domestic affair and the growth of these firms reflects not just what is happening in the UK, but also UK brokers’ activity overseas.

This trend will only continue as the sector becomes increasingly international.

Widening the revenue gap

Similar to last year’s Top 50 Brokers listing, there are six firms for 2024 that are posting more than £1bn in revenue.

Together, these six firms account for just under £10bn of revenue or 62% of the total ranking – this adds up to more than the entire revenue across all 50 firms in 2020’s report.

Four of the top six companies are the US majors – Marsh and McLennan Companies, WTW, Aon and Arthur J Gallagher. The other two – Ardonagh and Howden – are home-grown. All have grown their revenue this year.

Marsh and WTW – which have not been active in M&A in the UK for some time – have only grown their revenue very modestly. The other more acquisitive brokers – albeit Aon only recently – grew revenues by a double digit amount over the last year.

What is striking for 2024 is how big the gap is between this top six and the rest of the Top 50 Brokers listing.

Aon at number six has more than double the revenue of number seven ranked firm Lockton. It would almost certainly be impossible for any other firm to get to £1bn of revenue and get close to this group organically.

Through M&A, it would require a combination of probably three of the larger firms in the listing to break into this top group.

New entrants

This year’s listing contains five new entrants, which is in line with the longer-term average.

They are US consolidator AssuredPartners, which has provided us with consolidated UK figures for the first time this year, JMG Group, Oneglobal, David Roberts and Partners (DR&P) and InsurEvo.

Unsurprisingly, all are private equity (PE)-backed, or at least they were at the point of their last accounts when MarshBerry compiled the data for the Top 50 Brokers report.

Two of these businesses have been acquired this year and another is reportedly up for sale, so not all of them will appear again next year, making way for another group of new entrants in this listing.

Increasingly, the Top 50 Brokers report is shaped much more by industry M&A than it is by firms organically growing or shrinking their way in and out of the final ranking.

Climbing the ranks

The biggest gainers this year in terms of position were commercial broker Lloyd and Whyte – its figures include SEIB for the first time after being brought together under the broader ownership of the Benefact Group in 2023 – and Aventum Group, which has continued its remarkable growth trajectory.

This is particularly remarkable because it has been achieved largely without M&A.

Both organisations are up eight places compared to last year.

In terms of total revenue, it is Howden that has gained the most to fuel its journey up the final ranking. Only 14 firms improved their place compared to last year, while 23 brokers fell down the list. Around eight stayed stationary in their 2023 positions.

Margins

MarshBerry has again looked at earnings before interest, taxes, depreciation and amortisation (ebitda) margins across the Top 50 Brokers, where this information has been disclosed.

For 2024, average ebitda margins amounted to 21.1% – a modest uptick on 2023.

However, this figure is arguably of limited relevance given the very different business models across the top 50 firms, which spans very high margin MGAs and London market business, to high volume personal motor business, where margins are often in single digit percentages.

Overseas ownership

Overseas owners are behind 34% of this year’s list by number, or 52% of the overall revenue.

Around 10 years ago, overseas firms stood behind 58% of the top 50 brokers’ revenue, which is perhaps counterintuitive – but the slight fall here reflects the massive growth of home-grown brokers including Howden, Ardonagh and PIB Group over the past 10 years.

This growth has been facilitated by private equity capital that has come from several large US PE firms.

The broking sector is increasingly international. Cross-border M&A has become more important.

Many of the very largest US firms are already in the UK, but there are still dozens of major US firms that are not. At least not yet. And the UK is not just attractive to US buyers – the top 50 ranking for 2024 also contains businesses with overseas owners from Australia, Asia and Europe.

New overseas buyers are keen to acquire in the UK for the first time. Many will want to acquire a large business here as a platform for further growth, both in the UK and into Europe.

Overseas buyers can acquire businesses for this purpose from private owners, but only eight of the Top 50 Brokers in 2024 are still in private hands. It is more likely that overseas purchasers will buy from PE firms, which are by their nature temporary owners.

PE owners are behind 22 of this year’s top 50 brokers, controlling 42% of the aggregate revenue – up from 12 firms and 18% of the top 50 firms’ revenue 10 years ago.

MarshBerry predicts many of these businesses to be sold to US or other overseas buyers over the next few years.