Executive Summary

Insurance brokers work closely with their clients to find the broadest insurance coverage at the lowest cost. While some brokers handle all lines of insurance, others specialize in one or more areas of coverage.

Last year's frenzied atmosphere of consolidation has changed the face of the industry. The larger brokerage houses are showing higher revenues after swallowing up their smaller competitors and getting a larger client base. Those that have remained independent are winning clients by offering a more personalized service atmosphere.

Industry observers say premiums on a wide variety of insurance products are on the verge of increasing across the board. On Jan. 1, the Workers Compensation Rating Bureau reported that insurers statewide were instituting an average 18.4 percent hike in pure premium rates, and the property and general liability segments are preparing for double-digit increases as well.

The pacesetter

Aon Corp.

This year's list of the top insurance brokers in Los Angeles County has a new No. 1 company, Aon Corp. At $131 million, Aon's Los Angeles revenues are close to double those of the second-place finisher, Marsh Risk and Insurance Services, which was last year's top brokerage. Aon also has almost 25 percent more local employees than Marsh.

Last year was a busy one for Chicago-based Aon, with the acquisition of several international brokerage houses including Italian insurance leader The Nikols Group and Societe Generale d'Assurance et de Prevoganie, a leading French broker. The acquisitions were financed with internal funds, short-term borrowings and stock.

Also in 1999, Aon restructured its operations to handle all its acquisitions. Part of this restructuring included reducing the workforce of its U.S. and Canadian operating subsidiaries, as well as its European operations, through a voluntary early retirement program.

Although Aon last year saw an increase in both local and company-wide revenues, compared with 1998, the company's overall net income has dropped significantly. Aon Chairman and CEO Patrick Ryan attributed the fall-off in part to $150 million in charges taken for increased reserves to cover costs resulting from litigation and other matters. The company has also been spending more on its information technology systems.

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