Brokerage Watch

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Stock Prices: In terms of stock prices for property and casualty brokers, the year was mixed. With its stock up 54 percent, Aon experienced a remarkable year. However, Marsh and McLennan’s woes continued as its stock traded down 19 percent. Overall, the sector was up 13 percent in 2005. Aon announced the hiring of a new president and CEO, as well as several other actions, which were viewed positively by investors. The company sold its wholesale unit, Swett & Crawford, announced cost-cutting initiatives, and reported exploring strategic alternatives relating to the ownership of its warranty, credit insurance, and property and casualty underwriting business. Brown & Brown also performed admirably; its stock was up 41 percent during 2005. The Florida-based company maintained its growth through acquisitions of brokers throughout the United States and reported record net income and revenues in 2005. Hub International also continued to expand, announcing several “fold in” acquisitions, which will enable their regional hubs to grow. The company’s stock was up 42 percent. Organic growth remained stagnant in the sector overall, while companies continued to use acquisitions as the main focus for expansion into niche markets throughout the United States.

M&A Activity: Included in the 159 transactions documented by LMC Capital in the brokerage sector in 2005 were the sales of wholesale units by Marsh, Willis and Aon. Selected acquirers are listed below:

Capital Raising: Brooke Corporation was responsible for six of the 14 announced capital raising initiatives during 2005. Activities for the Kansas-based company included loan securitizations, secondary offerings, and a credit facility. Willis and Arthur J. Gallagher also announced new credit facilities during 2005. Willis and Marsh both offered senior notes totaling approximately $1.9 billion. In a noteworthy transaction, Anthony Clark closed on a $25 million secured debt financing arrangement with Bridge Healthcare Finance LLC and Bridge Opportunity Finance LLC.

LMC Capital LLC is a national investment banking firm focused exclusively on the insurance industry. The firm can be contacted at (704) 943-2600, by e-mail at Info@LMCCapital.com or visit the firm’s Web site at www.LMCCapital.com.