The largest insurance brokerage firms across Los Angeles County boosted hires and reported solid growth in 2017, with some companies’ revenues spiking more than 30 percent, according to Business Journal research.
A review of the top 40 insurance brokerages ranked by L.A. County revenue suggests a continued turnaround after steep job losses during the Great Recession.
Three quarters of the ranked firms reported gains in revenue for the year, six were flat or failed to report, and four reported a drop in earnings. The average growth rate for all of the combined firms last year was 9 percent.
Some executives attributed the leap in revenue to a flurry of mergers and acquisitions across the insurance industry, while others pointed to the economy’s overall uptick. Others said new data and technology processes used to streamline services and minimize risk upped profit margins.
Each of the fastest growing insurance brokerages said its rising revenue could be directly attributed to quality employees, customer service and old-fashioned business-client relationships.
At the top of the Business Journal list was Arthur J. Gallagher & Co., whose Glendale office reported revenue of $268.5 million, a 13.8 percent increase from a year earlier.
The Chicago-based firm – whose core insurance focus in Southern California mirrors economic engines in entertainment, health care, real estate and construction – also reported the largest gross year-over-year increase in Los Angeles County revenue at $32.4 million, according to the Business Journal report.
“We’re quite proud of the team,” said Scott Firestone, southwest regional president for Gallagher. “Year over year, we continue to attract the best and brightest people in the business. We’ve made a very conscious decision, during the Great Recession, to keep our best minds here.”
Sector rebounds
Recent forecasts by the Los Angeles County Economic Development Corp. indicated sluggish job growth for the combined insurance and finance industries across Los Angeles County.
A closer analysis by the organization, however, found finance has been harder hit while the insurance sector has grown since the recession.
Insurance carrier employment, which in the past decade peaked at nearly 52,000 in 2007, fell to around 44,000 in 2012 before springing back to 50,800 last year.
For the region’s top insurance brokerage firms, the upswing in jobs in 2017 rose in tandem with a 9.9 percent increase in combined revenue for top firms, according to Business Journal data.
Top firms grow
Others on the list included No. 2 firm Lockton Insurance Brokers of downtown Los Angeles, with $172.6 million in revenue and 4.4 percent growth for 2017; followed by Auto Insurance Specialists of Cerritos with $91 million in revenue and 3.4 percent growth; and Keenan & Associates of Torrance with $81.6 million in revenue and 8.9 percent growth.
Keenan, which was acquired by AssuredPartners Inc. last year, specializes in insuring schools, colleges, municipalities and health care organizations. It also provides loss-control services, third-party administration in processing claims and expertise on school safety, including active-shooter training on campuses.
The 46-year-old company attributed its nearly 9 percent growth in revenue last year to several large new accounts and an uptick in all portions of its business.
“We’re in the business of preventing claims and keeping schools safe,” said Charlotte Doepker, Keenan’s vice president of marketing. “It’s really about finding solutions for our customers within their budgeting needs, whether it’s your employee benefits, property liability or workers comp. That’s where we really excel.”
The top four insurance brokers kept pace with their 2017 rankings.
Alliant Insurance Services Inc.’s office downtown, meanwhile, proved to be the fastest horse, sprinting from No. 7 to No. 5 with $74.7 million in revenue.
Its year-over-year growth was 31.2 percent – and more than double the revenue earned in 2015. Alliant, headquartered in Newport Beach, credited much of the growth to its construction insurance division, according to firm President Greg Zimmer.
“Our noticeable growth in the Los Angeles market is primarily attributable to a combination of recruiting top talent in the area, significantly expanding a construction industry-related underwriting facility, and continuing growth of our national construction specialty practice, which is headquartered in downtown Los Angeles,” he said in an email statement.
M&A moves
Other milestones within top L.A.-area insurance offices were mergers and acquisitions within some of the nation’s largest companies.
Chicago-based Hub International Insurance Services Inc.’s, Westchester office ranked No. 6 on the Business Journal list with $71.3 million in revenue and 24.2 percent growth.
Last year it acquired five local brokerages, including City Insurance Services of Koreatown and Elkins/Jones Insurance Agency, each with revenues of around $7 million. Its secret?
“We have a value proposition for the people of Los Angeles,” said Andrew Forchelli, president of its Los Angeles operations and entertainment division. “Our roots are small and local and relationship driven.”
Bolton & Co., an 87-year-old independent brokerage in Pasadena, rose to No. 10 from No. 11 last year with revenue of $44.7 million, a 4.4 percent increase attributed to organic growth without any acquisitions.
The company, which has doubled its revenues in six years, specializes in middle-market firms and now ranks No. 80 out of 35,000 brokerages across the U.S., according to the company. It employs 186 people, adding 10 last year to serve a growing economy.
“We’ve been growing and other people keep being acquired, so we’re going in the right direction,” said Steve Brockmeyer, Bolton’s chief executive. “Our clients (tell us): payroll’s up; sales are up. And their premiums are up, because there’s more exposure.”
“More of the same for next year. We’re going to continue to keep growing. We keep on having to train new people. We’ve got a model that works.”
