Moody’s Investors Service has assigned a “stable” outlook to the global intermediary sector as brokers react to tough market conditions by cutting costs and conserving cash.

Its latest report reveals a number of challenges facing brokers including weak economic conditions, high financial leverage among private firms and a soft US commercial general insurance market.

Moody’s says those factors “have crimped growth for most brokers, but firms have sharply reduced costs and have conserved cash to protect their operating margins and financial flexibility”.

Many have exited non-core business and slowed the pace of acquisition activity, which is forecast to accelerate alongside improving market conditions.

Revenues fell during the first half for most brokers rated by Moody’s, but it says the brokers continue to gain from having limited capital expenditure, little underwriting or investment risk and relatively stable cash flows.