Insurance brokerages maintained profitability in the face of a suboptimal economic situation, ratings agency Fitch Ratings said on Wednesday.
"Profitability for insurance brokers remained relatively stable in 2009," Fitch said in the release accompanying its report.
While average organic revenue growth at the publicly traded insurers that Fitch tracks was negative for the first nine months of 2009, income rose during that time for four of the five companies. Earnings were bolstered by acquisitions completed in 2008, and the companies were able to pare costs in a difficult operating environment.
For 2010, Fitch predicts that brokerages' profit will be flat to moderately positive. But organic revenue growth may be hard to achieve, and margin improvements are unlikely to materialize due to previously accomplished staffing cuts.
This week, payroll service ADP said that companies are slowing their staffing reductions. The decline that ADP observed in January employment was "the smallest since employment began falling in February of 2008," suggesting that the jobless rate is likely to peak soon.
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Posted: February 3, 2010