Insurance rates are likely to continue to rise this year, but some policyholders with good losses may get flat renewals because insurers sometimes offer starting rates to win new deals, Brown & Brown Inc.'s chief executive said on Tuesday. "We are beginning to see a gap between increases in renewal and pricing of new business," said J. Powell Brown, CEO and broker.
Most policyholders are likely to still see higher rates this year, although there may be some moderation in the second half, he said.
Mr. Brown spoke about the broker's conference call with analysts who discussed Brown & Brown's results for the first quarter, which saw strong sales growth.
Brown & Brown reported two acquisitions during the quarter and has a strong pipeline of potential deals, Brown said. . He declined to comment on the possibility of buying a company sold by Aon PLC to secure his purchase of Willis Towers Watson PLC but does not rule out the possibility.
Brown & Brown reported first-quarter revenue of $ 81
Quarterly earnings increased to $ 199.7 million, an increase of 31% over the previous year.
Premium increases in the first quarter were similar to recent quarters, Brown said.
Permitted market interest rates increased by 3% to 7% over most lines, although some lines saw much larger increases. Commercial car interest rates rose by 10% or more; The surplus and surplus ratio increased by 10% to 20%, with coastal properties by 15% to 25%. and professional responsibility increased by 10% to 25%.
The employment compensation rate continued to decline but is approaching flat.
"Overall, the market is becoming more competitive in sections or areas and we are starting to see carriers willing to tie coverage to the starting rate for new business but the same carriers would like to get increases for their renewals," said Brown.
The flat renewals for new business most often occur in the middle market and upper middle market accounts in the Northeast and Midwest, he said.
The broker's two acquisitions during the quarter, including the acquisition of Cork, Irish O & # 39; Leary Insurances Ltd., generated approximately $ 33 million in revenue.
Mr. Brown said he expects Aon's purchase of Willis Towers Watson to be completed but declined to comment on whether Brown & Brown would be interested in buying any of the deals that could be sold by brokers to secure approval of the deal.
"We are always interested in looking at good companies that we think can fit culturally and be financially sensible," he says. "We do not like the terms never or always because they are a bit extreme." Catalog