Top Insurance Brokers, #9: Lockton Cos. LLC

Brokerage revenues in 2023: $3.5 billion
Percentage increase: 14.7%

Lockton Cos. LLC reported nearly 15% revenue growth in 2023, primarily from ongoing operations.

The brokerage firm also saw a change in top positions, with its former CEO, Peter Clune, leaving the company.

Mr. Clune had been the brokerage’s chief executive since 2019, when he replaced Ron Lockton. When Mr. Clune left in February — “by mutual consent,” according to the company — Mr. Lockton reassumed the role and retained his title of executive chairman.

Lockton reported $3.5 billion in brokerage revenue in 2023, up 14.7% from the previous year. It moved up one spot to ninth place in Business Insuranceplace in the ranking of the largest brokerage houses in the world.

Of the company’s $476 million in growth last year, 51% came from its U.S. business, 38% from its international business and 11% from its reinsurance brokerage business, launched in 2020, Mr. Lockton said.

The international business is organized into regions, and the brokerage firm plans to “continue to invest and grow in each of those regions,” Mr. Lockton said.

The integration of Sao Paulo, Brazil-based insurance and reinsurance broker THB Group Brazil, acquired in May 2023 from Amwins Global Risks Group Ltd., is part of the business’s further expansion plans.

“We are opportunistic about acquisitions and see them as a platform for future growth,” Mr Lockton said.

Lockton has been a selective buyer of other brokerages, said Timothy J. Cunningham, managing partner of Optis Partners LLC, a Chicago-based investment banking and financial advisory firm.

“They were a very strategic acquirer, mainly to expand their global reach,” he said.

Analysts say Lockton’s long-term growth strategy focuses more on recruiting than mergers and acquisitions.

“Lockton was built on talent acquisition. It’s a producer-driven, employee-driven company,” Mr. Cunningham said.

Last year, Lockton’s workforce grew by 750 workers to 11,920, the majority of whom, about 60%, live in the United States, according to company data.

“Lockton is focused on trying to attract, develop and retain competitive producers who can leverage extensive risk mitigation resources to write large and highly complex accounts,” said John Wepler, president and CEO of Woodmere, Ohio-based mergers and acquisitions consulting firm MarshBerry & Co. Inc.

“They would rather acquire top talent and create jumbo target accounts than try to acquire a company, integrate it and adapt it to their culture,” he said.

Mr. Cunningham said Lockton competes effectively with larger enterprises and organizations that have formal risk management practices and operate in specific sectors.

“They’re going to be strong in construction and surety; they’re going to be strong in manufacturing, nonprofits, large institutions. You can’t be a company this size without being strong in niches,” he said. Lockton started as a surety broker.

The reinsurance business, launched four years ago, has grown to $311.84 million in 2023. “We looked at the market and felt there was an opportunity there,” Mr. Lockton said. “Four years ago, we were looking at broker consolidation, which meant reinsurance consolidation. The market was getting smaller,” he said.

Before Lockton Re was established, the broker’s reinsurance business was mainly based in the UK, Mr Lockton said.

In the primary commercial insurance markets, Mr. Lockton said, “the biggest change we see in 2024 is a softening of rate increases in property and casualty.”

Workers’ compensation, directors and officers, and cybersecurity remain competitive, he said. At the same time, liability lines continue to pose a challenge for customers, some of whom have “significantly changed their purchasing philosophy and use of alternative products,” he added.

In the broader primary insurance market, Mr. Lockton said rate increases in some lines, such as property, are slowing. Workers’ compensation remains profitable, but personal accident and auto liability lines continue to pose a challenge for buyers, some of which have “adjusted their programs accordingly,” he said.

Lockton has hired several senior executives over the past year, including former Aon PLC executive Steven Goldenberg, who joined in February as executive vice president of operations; former Marsh & McLennan Cos. Inc. managing director Manpreet Gill, who joined as executive vice president of the broker’s global technology risk group; and former Guy Carpenter & Co. LLC executive Greg Spore as leader of U.S. financial services markets.