NFP: Contingent Comp Small Part Of Benefits Comp

By Staff Writer

December 03, 2004 at 07:00 PM

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NU Online News Service, Dec. 3, 2004, 6:02 p.m. EST

A rapidly growing financial services distributor says only a small part of its group benefits revenue comes from contingent commissions.[@@]

A team of analysts at UBS Securities L.L.C. talks about that finding in a report on an investor meeting with executives at Nationwide Financial Partners Corp., New York.

NFP has been building a national financial services distribution network by acquiring existing insurance agencies, benefits brokers and other financial services firms.

Preliminary results of an NFP review suggest that contingent commissions amount to only 5% to 8% of NFP group benefits base commissions, according to the analyst team, which is led by Andrew Kligerman.

Contingent commissions, which reward a broker for the performance of an entire block of business, have come under fire by some state attorneys general in recent months because of concerns that customers may be unaware of contingent commissions' influence.

The UBS report also covers NFP's view of demand for benefits brokers.

NFP has identified about 4,000 potential acquisition targets, and it has acquired 18 this year, according to the UBS analysts.

Although competition for most firms is light, big property-casualty insurance brokers are competing with NFP for some benefits brokers, the analysts write.

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