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4 Insurance Brokers Poised for a Bull Run in the Second Half
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The Zacks Insurance - Brokerage industry comprises companies that primarily offer insurance, and reinsurance products and services.
Insurance brokers act on behalf of their clients and offer advice keeping in mind clients' interests against brokerage fees. Some of these companies are also involved in providing risk management, third-party administration and managed health care services.
Given rising demand for their services along with better pricing and prudent underwriting, we expect long-term growth prospects for the industry players. Technavio analysts project the global insurance brokerage market to grow $20.52 billion, seeing a CAGR of more than 6% during the 2021-2025 forecast period, per their latest market research report.
In the first half of 2021, leading companies like Marsh & McLennan Companies, Inc. (MMC - Free Report) gained from solid revenues and strong segmental contributions. Other factors contributing to growth of insurance brokers in the first six months of the year are higher commissions and fees, and a continued margin expansion.
Let’s delve deeper to find out how these insurance brokers will perform in the second half of the year.
Factors Likely to Impact Insurers in 2H
Accelerated Mergers and Acquisitions: The insurance brokerage industry, which is traditionally a fragmented one, has been witnessing fast-paced consolidation. The primary factors driving mergers and acquisitions (M&A) is the need of the companies to become specialized in their businesses. Interest shown by private equity firms in this sector, intensifying competition and lack of organic growth are other factors pushing M&As.
Increased Demand for Products: With the rising population of baby boomers, demand for medical insurance, life insurance, accidental insurance, etc. is surging, thereby creating growth opportunities for insurance brokers. Increased awareness about insurance policies is also leading to growth. The industry players are continually expanding globally, cross selling products, hiking rates, tightening underwriting standards and controlling expenses.
Higher Adoption of Technology: To maintain competitiveness in the industry, players are embracing technological changes. The threat comes from new entrants including fintechs like Insurtech, start-ups and others. These players are focused on using technology and innovation including AI, robotics and blockchain to simplify and boost client experience, enhance efficiencies, alter business models and bring about other changes in industries in which the existing participants operate. However, the same might elevate operating costs.
What Will Keep the Momentum Alive?
We think that the future remains bright. Moreover, this buoyancy in the brokerage insurance space is confirmed by its Zacks Industry Rank within the top 15% (37 of 253).
In a year’s time, the industry has rallied 15.6%, underperforming 31.5% growth of the S&P 500 Index.
Stocks on the Watchlist
The industry’s progress has been relentless so far and there are plenty of opportunities for the industry players to grow in the future as well. Thus investing in this space should be a wise choice.
Let us take a look at the stocks that should be on investors’ radar right now. Here we pick four bets that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and also witnessed their earnings estimates move north over the past 30 days. Therefore, these companies hold great potential to retain a purple patch going forward. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aon plc (AON - Free Report) is headquartered in London and currently carries a Zacks Rank #2. This British multinational corporation offers risk management services, insurance and reinsurance brokerage, human resource consulting and outsourcing services worldwide. Divestiture of its non-core operations to streamline business and focus on more profitable operations as well as cost savings from its restructuring programs bode well.
The company delivered an earnings surprise of 10%, on average, in the trailing four quarters. The Zacks Consensus Estimate for 2021 indicates an increase of 4.7% from the year-ago reported figure. Its shares have surged 41.7% in the past year.
Brown & Brown, Inc. (BRO - Free Report) is located at Daytona Beach, FL. The currently Zacks #2 Ranked company markets and sells insurance products and services in the United States, England, Canada, Bermuda and the Cayman Islands.
It is poised to benefit from strategic acquisitions and mergers as well as investments to boost organic growth and expand margins. The stock has witnessed its 2021 earnings estimate move 5.6% north over the past 30 days.
The company came up with a trailing four-quarter surprise of 21.4%, on average. Its shares have gained 25.4% in the past year.
New-York based Marsh & McLennan was founded in 1871. It is a global leader in insurance brokerage. Strategic acquisitions and improving revenues on the back of diverse product offerings should fuel long-term growth for the company. The stock with a Zacks Rank of 2 at present has witnessed its 2021 earnings estimate move 0.3% north over the past 30 days. The bottom line managed to beat estimates in all the trailing four quarters, the average being 13.9%.
Shares of the company have surged 37.9% in the past year.
Willis Towers Watson Public Limited Company is a leading global advisory, broking and solutions company. Escalating organic commissions and fees, solid customer retention levels, strengthening new business, robust exchange business, strategic acquisitions and a sturdy capital position should aid growth.
This presently Zacks Rank #1 stock has witnessed its 2021 earnings estimate move 6.2% north over the past 30 days. The company came up with a trailing four-quarter surprise of 13.5%, on average. Its shares have gained 5.7% in the past year.
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4 Insurance Brokers Poised for a Bull Run in the Second Half
The Zacks Insurance - Brokerage industry comprises companies that primarily offer insurance, and reinsurance products and services.
Insurance brokers act on behalf of their clients and offer advice keeping in mind clients' interests against brokerage fees. Some of these companies are also involved in providing risk management, third-party administration and managed health care services.
Given rising demand for their services along with better pricing and prudent underwriting, we expect long-term growth prospects for the industry players. Technavio analysts project the global insurance brokerage market to grow $20.52 billion, seeing a CAGR of more than 6% during the 2021-2025 forecast period, per their latest market research report.
In the first half of 2021, leading companies like Marsh & McLennan Companies, Inc. (MMC - Free Report) gained from solid revenues and strong segmental contributions. Other factors contributing to growth of insurance brokers in the first six months of the year are higher commissions and fees, and a continued margin expansion.
Let’s delve deeper to find out how these insurance brokers will perform in the second half of the year.
Factors Likely to Impact Insurers in 2H
Accelerated Mergers and Acquisitions: The insurance brokerage industry, which is traditionally a fragmented one, has been witnessing fast-paced consolidation. The primary factors driving mergers and acquisitions (M&A) is the need of the companies to become specialized in their businesses. Interest shown by private equity firms in this sector, intensifying competition and lack of organic growth are other factors pushing M&As.
Increased Demand for Products: With the rising population of baby boomers, demand for medical insurance, life insurance, accidental insurance, etc. is surging, thereby creating growth opportunities for insurance brokers. Increased awareness about insurance policies is also leading to growth. The industry players are continually expanding globally, cross selling products, hiking rates, tightening underwriting standards and controlling expenses.
Higher Adoption of Technology: To maintain competitiveness in the industry, players are embracing technological changes. The threat comes from new entrants including fintechs like Insurtech, start-ups and others. These players are focused on using technology and innovation including AI, robotics and blockchain to simplify and boost client experience, enhance efficiencies, alter business models and bring about other changes in industries in which the existing participants operate. However, the same might elevate operating costs.
What Will Keep the Momentum Alive?
We think that the future remains bright. Moreover, this buoyancy in the brokerage insurance space is confirmed by its Zacks Industry Rank within the top 15% (37 of 253).
In a year’s time, the industry has rallied 15.6%, underperforming 31.5% growth of the S&P 500 Index.
Stocks on the Watchlist
The industry’s progress has been relentless so far and there are plenty of opportunities for the industry players to grow in the future as well. Thus investing in this space should be a wise choice.
Let us take a look at the stocks that should be on investors’ radar right now. Here we pick four bets that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and also witnessed their earnings estimates move north over the past 30 days. Therefore, these companies hold great potential to retain a purple patch going forward. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aon plc (AON - Free Report) is headquartered in London and currently carries a Zacks Rank #2. This British multinational corporation offers risk management services, insurance and reinsurance brokerage, human resource consulting and outsourcing services worldwide. Divestiture of its non-core operations to streamline business and focus on more profitable operations as well as cost savings from its restructuring programs bode well.
The company delivered an earnings surprise of 10%, on average, in the trailing four quarters. The Zacks Consensus Estimate for 2021 indicates an increase of 4.7% from the year-ago reported figure. Its shares have surged 41.7% in the past year.
Brown & Brown, Inc. (BRO - Free Report) is located at Daytona Beach, FL. The currently Zacks #2 Ranked company markets and sells insurance products and services in the United States, England, Canada, Bermuda and the Cayman Islands.
It is poised to benefit from strategic acquisitions and mergers as well as investments to boost organic growth and expand margins. The stock has witnessed its 2021 earnings estimate move 5.6% north over the past 30 days.
The company came up with a trailing four-quarter surprise of 21.4%, on average. Its shares have gained 25.4% in the past year.
New-York based Marsh & McLennan was founded in 1871. It is a global leader in insurance brokerage. Strategic acquisitions and improving revenues on the back of diverse product offerings should fuel long-term growth for the company. The stock with a Zacks Rank of 2 at present has witnessed its 2021 earnings estimate move 0.3% north over the past 30 days. The bottom line managed to beat estimates in all the trailing four quarters, the average being 13.9%.
Shares of the company have surged 37.9% in the past year.
Willis Towers Watson Public Limited Company is a leading global advisory, broking and solutions company. Escalating organic commissions and fees, solid customer retention levels, strengthening new business, robust exchange business, strategic acquisitions and a sturdy capital position should aid growth.
This presently Zacks Rank #1 stock has witnessed its 2021 earnings estimate move 6.2% north over the past 30 days. The company came up with a trailing four-quarter surprise of 13.5%, on average. Its shares have gained 5.7% in the past year.
Image Source: Zacks Investment Research