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The county’s 21 largest insurance brokers saw a drop in revenue for the second consecutive year as they struggled to find new business and alternative revenue streams from existing clients.
Revenue at local offices decreased 2.4% to $449.5 million for the 12 months through June, according to this week’s Business Journal list. The two straight years of declines follow six years of gains.
While overall revenue was down, 10 companies saw increases, six saw declines and one was flat. Data for four of the companies were Business Journal estimates.
The companies held steady on local employment, with a total of 1,790 workers. The total included 335 property and casualty brokers in OC, down nearly 3% from a year earlier.
The companies also saw a 4% increase in the number of benefits brokers to 267, a sign that big job cuts might be over.
The number of support staff at the companies remained relatively flat at 1,188 people, less than a 1% drop.
Alliant Still Tops
Newport Beach’s Alliant Insurance Services Inc. maintained its top spot on the list, growing revenue by 14.1% to $77.2 million, the highest percentage growth of any company here.
Healthcare has been one of the brokerage’s fastest growing business segments in the last year.
Mark Conway, a senior executive vice president and managing director based in Alliant’s Newport Beach office, said clients now are demanding more expertise and resources, from advice on legal compliance to healthcare reform, he said.
“This trend has enabled us to grow during challenging economic times and positions us for future growth while many other firms will not be able to respond to these demands,” Conway said.
The brokerage has 17 licensed property and casualty producers here, down two from a year earlier, and five benefits producers, flat from a year ago.
The company’s local support staff declined 7% to 133 workers.
Alliant works with hospitals, local governments and school districts, law firms, oil and gas companies, American Indian tribes, real estate companies and others.
New York-based Marsh Risk & Insurance Service/Mercer maintained its No. 2 spot on the list, inching revenue up 0.2% to $48.4 million. The company, formerly known as Marsh & McLennon Cos., saw employment across all levels stay flat with 15 licensed property and casualty producers, 27 benefits producers and 154 staff workers at its Newport Beach office.
No. 3 Brown & Brown of California Inc. moved up two spots in the rankings.
The Daytona Beach-based company saw revenue tick up 0.2% to $34.7 million. Brown has 29 property and casualty producers and five benefits producers. Each of those segments added one employee. The brokerage has 72 support staff positions here, up seven from a year earlier.
Aon Trims Auto
No. 5 Aon Risk Insurance Services West Inc., which dropped two spots, led the declines.
Revenue at the Chicago-based brokerage sank 38.8% to $26 million, its second straight year of losing substantial business here and a big factor in bringing OC revenue figures down across the board.
Arthur Schuler, managing director for Aon in Irvine, said economic conditions hurt clients’ revenue and headcounts, which reduced insurance demand and consultancy services.
Aon’s revenue also was hit by the sale of subsidiary Auto Insurance Specialists Inc.
Schuler said he expects business to improve with the economy and through Aon Consulting’s merger with Illinois-based Hewitt Associates LLC.
“Although we are not aware that any of our clients are predicting or planning for an improved economy, we anticipate the impact we have seen on revenue to follow course as the economy turns around,” he said.
Aon has 50 property and casualty producers, down 15 from a year earlier, and 25 benefits producers, down seven from last year. The brokerage did boost its local support staff by five to 20 positions.
Irvine’s Millenium Corporate Solutions held on to its No. 10 spot, increasing revenue 3.3% to $15.3 million.
Like most insurance brokers on the list, Millenium has four primary business lines: property and casualty; employee benefits; personal lines; and surety, or commercial bonds.
Chief Operating Officer Stephen Saporito said the company beefed up personal lines, which handle home and auto insurance for consumers, and its surety bond business for construction projects.
Surety bonds are purchased by project owners to provide recourse in case a contractor does not finish a project on time or proficiently.
Diversification helped Millenium avoid a big revenue drop from its entire OC operation. Property and casualty and employee benefits lines have struggled in the recession as many companies cut staff and benefit packages.
Millenium saw an 8% revenue jump in the last year in personal lines, which tend to be relatively resistant to economic downturns. The company notched a 12% increase in surety. It has acquired three surety practices in the last five years, relying on their books of commercial business to get the company through the housing construction slump here.
Stimulus Helps
Shovel-ready projects from the $787 billion American Recovery and Reinvestment Act also boosted business in the surety division.
“That’s where a lot of the growth has been,” Saporito said.
No. 18 Wood Gutman & Bogart Insurance Brokers met all its production and new business goals in the last 18 months when the company factored the tough economy into projections and kept losses to a 2.9% revenue drop to $10.2 million.
“We were not able to keep up with the continuing deterioration of economic activity in the county,” said Kevin Bogart, president and partner of the Tustin-based company.
Before the downturn, hitting business goals typically translated into double-digit revenue growth, but not today.
“(Our expectations are) substantially reduced today from where they were,” Bogart said. “We’re hoping to remain flat, which has been very challenging to do. It’s been a frustrating time.”
