Large insurance brokers are investing in growing insurance opportunities abroad, where the macro environment presents a marked contrast to domestic price deterioration, low interest yield and continued pressures on exposure to a weak economic recovery, says Yaron Kinar, Analyst at Deutsche Bank AG.
“One is that they can grow in markets where GDP growth is faster than the domestic growth. Two, it means that they can focus on markets where insurance penetration is on the rise,” Kinar said. “And the third element is that your client base is becoming increasingly global and increasingly sophisticated.”
Kinar points to Aon Corporation (AON) as a large insurance broker with an international platform poised to benefit from global insurance opportunities. He also says the company is very efficient relative to peers, and its GRIP product is ahead of the competition.
“[Aon] has spent a lot of efforts and energy and money, capital on improving its systems, which should in theory, and time will tell, allow it to be a better high-margin revenue generator going forward, and with a lot more of these revenues to flow down to the bottom line,” Kinar said.
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