December 2022
Public Broker Performance
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MarshBerry Broker Index
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MarshBerry Broker Index December Update
During this continued volatile year in equities, a composite share price index of six publicly traded insurance brokers (Arthur J. Gallagher & Co. (AJG), Aon plc. (AON), Brown & Brown, Inc. (BRO), Marsh & McLennan Companies, Inc. (MMC), Willis Towers Watson Public Limited Company (WTW) and BRP Group, Inc. (BRP) outperformed compared to the broader stock market indices through November.
As the major indices continued to see greater declines year-to-date, the MarshBerry Broker Index outperformed benchmark indices during the same period. Through November 30, 2022, the S&P 500 decreased by -14.9% and the DJIA decreased by -5.5%, while the broker composite increased by 5.0%.
The S&P 500 began the month of November with a YTD performance of -19.3% through October 31, 2022. The MarshBerry Broker Index composite was down -2.7% for the same period. A looming recession, geopolitical tensions and the Federal Reserve’s aggressive monetary policy to fight inflation kept investors concerned. However, on the last day of November, equities saw broad gains when Federal Reserve (Fed) Chairman Jerome Powell stated that the Fed may slow the pace of its aggressive rate hikes starting in December. “The time for moderating the pace of rate increases may come as soon as the December meeting,” said Powell.1 The next policy updates from the Fed are expected to come from its scheduled December 13 – 14 meeting.
While the public insurance brokers cited growing macroeconomic concerns, they reported overall positive results in their latest Q3 2022 earnings, which were attributed to a combination of improving new business, strong retention and continued insurance rate increases. However, overall organic growth figures reported were slightly lower in Q3 2022 vs. Q2 2022.
The public brokers have larger recurring revenue bases and businesses that are noncyclical, supporting more stable growth during downturns. People always need to buy insurance. As a result, the volatility of the P&C insurance industry is significantly less than other industries. The resilience of this industry has been witnessed in periods of volatility time and time again. Many to this day still cannot fathom how the average insurance broker only declined 3.8% in commission and fees during the Great Recession trough of 2009.2
Public Broker Comps
- https://www.cnn.com/2022/11/30/economy/jerome-powell-speech-economy
- https://www.marshberry.com/resource/the-ma-valuation-dirty-little-secret/
Illustration generated by MarshBerry with data sourced from Yahoo Finance – 12/1/22. The MarshBerry Broker Index is a composite of market data sourced from Yahoo Finance on the following companies: BRP, BRO, AON, AJG, MMC, WTW. It is prepared for analytical purposes only. This information 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.
This earnings summary has been prepared by Marsh, Berry & Co., LLC. 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., LLC has not independently attempted to investigate or to verify such information. The MarshBerry Broker Index is a composite of market data sourced from Yahoo Finance on the following companies: BRP, BRO, AON, AJG, MMC, WTW. It is prepared for analytical purposes only.
*Results as of Q3 2022
Source: S&P Global Market Intelligence, Company Reports, FactSet, 12/1/22. EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization. AON = Aon plc; AJG = Arthur J. Gallagher & Co.; BRO = Brown & Brown, Inc.; BRP = Baldwin Risk Partners; MMC = Marsh & McLennan Companies, Inc.; WTW = Willis Towers Watson Public Limited Company. 2022.