Earnings call transcript Q1 2023

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Operator

Good morning and welcome to the Brown & Brown Incorporated First Quarter Earnings Call. Today's call is being recorded.

Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call and including answers given in response to your questions may relate to future results and events or otherwise be forward-looking in nature. Such statements reflect our current views with respect to future events, including those relating to the company's anticipated financial results for the first quarter and are intended to fall within the safe harbor provisions of the security laws. Actual results or events in the future are subject to a number of risks and uncertainties and may differ materially from those currently anticipated or desired or referenced in any forward-looking statements made as a result of a number of factors. numbers company's first it results quarter the preliminary the results its differ include the current the in for that unaudited factors determination issued finalizes as financial from press Such release forth yesterday. set its financial the company's that have not the Commission. and reports those filed may quantified time to currently identified Exchange and with uncertainties company from or time and factors Other identified risks in the Securities

of as well discussion slide company's company's the information otherwise. or prospects, Additional with revise filings disclaim these We business statements forward-looking future factors and presentation and Securities obligation or connection the intention additional or result the to in affecting any as whether and is of other new Exchange Commission. in statements, update events this in with regarding the call forward-looking information any and contained posted a as

In measures the GAAP company's Investor addition, then call. the www.bbinsurance.com non-GAAP for of Calendar conference at certain found in be press reconciliation any company's call of on measures this on Events. the presentation website this by in in earnings to Relations release financial used there clicking measure can are or non-GAAP investor and most financial A the financial comparable

that President to now and With said, turn Brown, will over Mr. Chief Powell I the call Executive Officer.

You may begin.

Powell Brown

earnings call. and XXXX everybody, QX morning, our Good to welcome

we pleased it I'll closing in with landscape; financial for I'll with any wrap up more lastly, to into then performance get updates And on Andy open the along results. detail, Q&A. QX before we're will was our results M&A some insurance up we thoughts some very with quarter some Before our around market quarter, detail. outstanding and high-level discuss an provide the our comments and

over revenues put our of organically. $X.X I'm billion. XX $X.X slide growing in in total delivered XX.X% this were ago total We now revenue, annual To and XX% billion perspective, number four. on years

quarter the strong remained margin EBITDAC at for XX.X%. adjusted Our

We first $X.XX, growing X.X% delivered the of earnings over XXXX. of quarter per share

estimated M&A annual delivered the On profitable with We're million. $XX another acquisitions pleased growth. have of of very revenues quarter good outstanding seven front, we completed to

I'm employees. there's fourth looking leaders standpoint, cautious while material businesses business and not most are a an hire rates. about still of quarter say to of what XXXX. heard we companies our interest grow managing the five. slide been are Overall, the inflation on generally customers continue impacts From We the and in higher change for economic would from future to

insurance prior of first The were customers and coverage, admitted and lines up similar XX%. excess markets challenging X% markets to increases marketplace quarter. the is very X% Across in surplus rate to most to for quarters XX% with up

there are exceptions. However,

E&S Workers' and XX% rates liability slightly. some they're rates, more compensation rates up moderate professional cases continue or to company to down primarily with continued D&O decline. public in

The most their participants to result areas and losses are increased property evaluate remain property actions insured continue -- property that liability generally E&S to in placement. Carriers a their the coastal challenging elevate These on due more and portfolios. values. coastal excess

and per on values are thus insured square based to seeing increase continue We foot, premiums higher underwriters rise rates see customers values.

buyers increased result, limits, overall deductibles increases loss and a are customers As purchasing limits. feeling the and exhausted with more are decreasing premium

will year. everyone's the market last the watching believe positive. Pertaining late reforms we the Long-term to be Florida insurance of changes see impact legal to the

the time related However, see changes. to take to legal improvement some will we think it

only one insureds. resort and market of at move In to last solutions be will the for to was Right interim, Please for condominiums most continue more Citizens. and Citizens apartments. the of the homes, residential one competitive the remember, times of now policies created it's into

at another similar not GRP active our quarter to primarily it perspective, from had the slowed. does backers what don't financial remain from seen to deals mean That of As level and multiples has trade we've we solid relates But market the M&A M&A past of high-quality the over overall year. businesses transactions.

they're the to & team. We're very of Brown success with the pleased their quality Brown the adding and businesses

remains and make culturally identifying approach on financially. high-quality companies centered that disciplined Our fit sense

number I'm now on slide X.

Retail Our by organic X.X%. new rate across The retention impressive delivered good business, segment business, all of increases. were growth lines growth continued driven of strong and

really In well benefits addition employee our businesses performed in QX.

quake processing Ian. and another group new by strong revenue growth captives. delivered double-digit of was good This our our business, business and XX% our driven wind and from by outstanding from diverse Segment nearly quarter performance fueled of Program retention rate of Hurricane organic programs increases, growth primarily Our claims lender-placed

with another rate Wholesale The somewhat continued of slowed driven and quarter growth of delegated brokerage open growth our retention improved. the business new good Brokerage while by with business delivered rate for authority increases. X% solid organic of growth along

XX,XXX-plus these driven Organic growth the revenue was to our for processing segment claims by for X.X% teammates world delivering the the like strong throughout to Services the for thank winter quarter, storms. I'd related results. primarily

it Now like turn results our I'd in over Andy to to detail. discuss more financial to

Andy Watts

our Since an in Thanks basis. morning results Powell Powell adjusted good and the GAAP consolidated presentation, on earlier Great. financial I'll results discussed everyone. review our

on number slide over X. We're

our on As of and estimated gains BdB and a business year exclude reminder losses in divestitures. the or our associated measures earn-out GRP, payables, adjusted acquisition with last one-time acquisition costs change Orchid

to related one-time bought we which ago. it considered million over XX business The is nature. a $XX to quarter in also resolving matter business event pre-acquisition years a excludes charge from a This relates

to closely reflection in adjusted the can the appendix be isolating this to amounts the better found items amounts of reconciliation of GAAP enhanced a believe and the the We business presentation. performance provides gives comparable -- The these most comparability. above amounts of

quarter, before as by were growing record by compared the grew for revenues to Income prior increased billion EBITDAC a $X.X Total the and year. XX.X% us XX.X%. taxes XX.X% new first for income

investment benefit the We had that offset with incremental income. one-time business moving substantially across this few of quarter additional included a even that parts good leverage some costs the

are margin in XX for versus it basis points. negatively higher first quarter seasonally means, quarter as margins first company. the the This the for more before, addition year weighted the In margin approximately we've the our by mentioned throughout impacted GRP, evenly

will As before last Income to a benefit with grew our we due slower incremental expense revenues, completed a GRP in rate acquisitions future at interest margins associated quarters. income the and than taxes total year. result, amortization

effective of year. from quarter occur tax due incentive tax rate lower to is came The is The stock compares higher expectations in which last line with shares vesting at our first that XX% year. a the of first quarter in rate in to benefit the the and the traditionally in XX.X% of

share the year-over-year changes assets $X.XX. to in with percentage X.X% offsetting net diluted salaries by, income revenue liabilities our There's and increased basis the to Our expenses per last XXX compensation points. related benefit were associated plan, other impacted by an from a deferred within operating negatively of as year Due expenses. and

to and year. count as paid slightly XX% compared of Lastly, our last share about weighted increased first dividends average both the quarter increased

organic We're margin X.X%. slightly on adjusted X. The for contracted to Slide quarter. EBITDAC quarter Retail the XX% number growth segment of outstanding an The delivering had

our by While employee margin the revenue by the from States, profit in remained about level compared points impacted our as was GRP and XXX United driven QX to margin higher the strong, benefits business. of phasing it basis

in impact We will provide quarters. expect future a margins our positive and to this reverse

expect some the to year year-over-year with also these lessen headwinds associated continues. and which higher We realized we headwinds as expenses, travel related

growth. million strong with EBITDAC along in number basis growth The and mind XX.X% Keep Slide another margin on over X. improvement National Hurricane organic Programs expansion associated revenue had quarter, organic points. of of the our Ian. very strong $X margin the driven by quarter with base approximately with of processing revenue We're for leveraging adjusted XXX includes that, claims was expense

that $XX year. to million the million million We started compared year approximately of recognized approximately revenue in first as this of of last year. of In expected this addition, our to first captive quarter of to in revenue facilities deliver $X last revenue the $XX we year quarter million are $XX

The comparative positive in will be quarter each by will organic the more captives fourth on to diminish and from a as basis. growth subsequent quarter be negligible we impact these will

be expect half good last to fact National of While year. revenue This million we as will onetime XXXX, lower half the year do organic that, the bonus of this of growth is non-recurring we growth due $X Hurricane quarter will million a basis. of the approximately of with compared to realized comparative more the captives in the fourth in in a second $X anticipate Programs a of second we associated year. We the last had have last on quarter Ian year, and fourth

slide moving number XX. to over We're

hiring was as wholesale Our margin adjusted EBITDAC the growth costs organic due salary contracted the incremental good driver with to quarter of higher The X% another well salaries and related of margin inflation. and as decrease slightly. segment delivered

basis decreased the of the as grew by segment adjusted number We're drivers the The as points. The and of higher primary onetime costs margin related volume revenues organically on some Services businesses XXX the with decrease expense EBITDAC well quarter slide certain salary XX. and X.X% for for items. by claims margin

last approximately was and taxes quarter were of cash comments flow interest first relief. that as We million allocation. generated in Hurricane for few deferred $XX cash A which operations paying Ian regarding result the year year, generation of from higher and capital impacted this a of by

cash. ended of of disciplined to year $XXX are operating with We quarter continuing and We expect approximately the generation deployment. strong another cash million

done the planning are deployments during year We we've following further debt larger as capital. of repayments

our industry-leading ratio of the revenues, flow growth to to and capital are in help drive from invest of We total the further future. position in cash are proud believe and strong a very operations we in business

good margin of the our the up first we year full our our are our the previous versus what update quarters, to And should a as outlook. guidance see Based want we can for regarding raising quarter results be coming for result slightly full on margins. guidance Lastly, and year flat. the over we

me it Powell let that, to over closing comments. With turn for back

Powell Brown

report. great a for Andy Thanks,

of increases which operate. on We continue the economies inflation impact watch the in we rates in interest to and

coming cautious most As our a hiring leaders prospering. the be will that pace and business their With we continue to customers investing over said, regarding expect are result, the of quarters. of

over buyers coastal several marketplace, property in years. increases the to the rate in anticipate increases fatigue intermediate We due In term. have delivered near last pricing similar to the

either result, or we're buyers seeing decrease a loss As limits. increase deductibles opt possibly limits for

seeing going in and their wind mortgage personal their lines some off we're paying In customers without instances, personal policies. coverage

diversification. and with equality the We partners capacity, our continue talk flight to about carrier

many MGAs underwriting over have and results our MGUs approach. delivered disciplined due to Our years good

capacity this deliver incremental us programs. our retain and/or help As a result, will from growth to increase well positions our organic that

performance in a GRP located to Many They're our months. of business and the retaining In capabilities to completing and with They're you also lastly, with new customers. acquisitions acquisition X. over the We to Canadian Canadian acquisitions our of adding the We'd high-quality first joined approximately they're marketplace. XXX add are Toronto pipeline. that capabilities our teammates have strong our And winning of have the retail teammates we're few GRP, footprint. we completed growing recent Breckles in seen all geographic case of nicely past and in with Highcourt pleased international of and and good BdB. position a M&A on April will us like welcome that

Overall, We're really business winning feel good our our business more new and job executing. our about is positive we customers. a team how of doing retaining and

focus capabilities the of have & to the first internationally. customers lot the XXXX, forward coming momentum of good for Our on quarter. our is of and leveraging and benefit total having out We're a both of a looking Brown domestically Brown

the open With over and we'll Mikee it that, lines for Q&A. turn back to

Operator

Your Instructions] UBS. line comes Weston first Bloomer [Operator you. from Thank from question of the

line open. Your is

Weston Bloomer

Hi. on more see out the ex-GRP. still to maybe XQ by full margin hoping is outlook My where for was now the you're first was segment I'm margin in the focused down could you expansion margin where expecting question I on there Retail for break expansion. morning. Good year. the

be break the minuses you that'd if and So could pluses out there maybe great.

Andy Watts

here. Yes. Andy Good morning, Wes,

don't take granularity provide by of everything, on level things of couple a maybe that the but into outlook consideration. segments we So and to just

a benefit. in for Our reverse That comments for the earlier is GRP will will and the points quarter. coming headwinds over quarters of itself XXX Retail be we basis had about

travel And along continue lessen will entertainment basis. it the of and and mentioned cost the that inflation side we some as around the year we're of as more a on to comes comparative

of kind an of it should look gives like. what that hopefully So idea you

Weston Bloomer

inflation I you a Got as of it. couple from hiring that any in called wage And Retail segments. impact was other well? there know out in and

Andy Watts

we've mean, Yes. all of call always because some the had it. got I in out we didn't business. mean, We a of it We number have but our -- in it segments, investing specifically, I in we're

quarters the have time hiring and always by downs can up and you based So some growth. upon

Weston Bloomer

FX to guide that's guided that maybe haven't margin built as you the an know of for I quarter? well in there headwind past, one FX last the And second into but is kind

Andy Watts

sir. No,

Weston Bloomer

for Great. questions. taking the Thanks

Andy Watts

you. Thank

Operator

of is from Your next Elyse question the Wells Fargo. Greenspan line from

open. Your is line

Elyse Greenspan

on Thanks. Hi. morning. also was My margin side. Good first the question

the of get all, better updated of reversing margins quarter in the does quarters in understand, calling points is having expect about other only first I over in three the all of significant So, I course a to out, expand year? that. want in other would I quarters? I the the all you're And GRP. then will also think thing year, guess, the think that that as to from margins just your that impact that you And basis then XX the about guess, just from want guidance that seasonality of we on

Andy Watts

of pieces a take can there. we if see few Let's those

on points the first relatively yes, and that and perfect. the reverse in the see not GRP is end year on Let's evenly of it's will one the basis the XX spread so back

quarter, pretty we've in So it's with even the through communicated year not XX% each but consistent in the there. what past

quarter Other are to is, investment from it offset in did income. that we our mind in one-time the the keep that our thing in have benefit we had mentioned some items numbers and

So, that not future envision again, recur quarters those that would out there. we'd in are

Elyse Greenspan

And QX had you provided what then I income, think than it's investment trending is quarter. guys last right, better the

had the level million Is full $XX QX rate I said run you think investment million good a income? $XX the year. for for to

Andy Watts

remember depends were was up coming upon down cash, that up put are you number. going from the wouldn't it year-over-year but When probably along. year you in that and last balances on move that's Yeah, do probably an year can reasonable somewhere which think about because to a absolute, all range as what what want rates on the is incremental

basis okay? So a rate when run it, think about model on you it

Elyse Greenspan

great. And last then Yeah, it’s one, retail.

growth both we it think organic the segment? a of highlighted one-off in guess, or good business. seems Anything guys QX. both environment to like in the benefits as guys want I brokerage You growth good just the there core highlight on go-forward about and you that the anything both

Powell Brown

that as and continue say base. really existing And help No, retail market service talented haven't is the bringing and that with performing. Elyse. I I we we how already teammates we the pleased we're those hire to us wouldn't customers said We're to to like customer on that anything our say, business producing that have,

business growth nothing our year out well. with and GRP excited but in itself, we and about positioned So the pleased tell both with would not of you I Ireland but Canada new very just ordinary about last just are is where as the acquisitions, like domestically retail in

Elyse Greenspan

Thank you.

Andy Watts

you. Thank

Operator

your of ask is from Your Peters line Gregory next question. from James. question the Please Raymond

Gregory Peters

rates there's Florida. Powell the Good for comments morning if a migration the going back commission might all I be that Andy. Citizens your about on some Paul I'm and impact to guess, to go of challenges the pressure in my to that impression It's company.

the on you could minute conditions talk pressures what's of with other insurance a about considering property the of in business seeing cetera? and maybe business? talk about the And in your you going to on And migration market. then Florida, us any impact economic Citizens just developments its any and Are so the spend et economically

Powell Brown

Sure.

is today Florida in Florida impact So of different. like first much billion years to business that's XX a clarify versus of $X-plus all revenue, of impact that the I'd of the ago

to So I think start it's important there.

-- that to the thing mean customer Florida, that with an economic you our their different But they margins mean that go booming, what be they would that people construction into on -- And in base would well. in is standpoint, doing is tell you second packed. speaking our are not generally industries by inflation and The because levels seem having does necessarily P&Ls. I are I is growing, quite from are it's that different That -- dinner, if tell impact I of growing. cost their and to you

the So still Florida. -- well doing economy in it's is

like have because since about that some you this are relates for and to two to about around differences I'd of been talk that. -- Citizens, similarities I'd it like to XXXX. there scenarios, talk those As is some

the So okay? today. we're resort, start is in of deemed In parallels. XXXX market So that's going and similarities here's to and last end. Citizens and let's start basically the where there as retail the

of credits, fact and market quoting that was an to rate if being is down on XXXX Citizens in $X.XX and was So last me. hypothetical and just in mitigation from -- then the bear Citizens wind examples. condominium a resort took are these market a $X.XX. This just implemented -- the $X dollar Governor that bearing a it's the in rate example, not so with If rate

So of took and us in was much to – from going effectively insured of organic terms growth $X.XX as stuff. values. buyer Florida negative in organization, per the in in $X.XX XXXX, concentration action that all itself That to an different

Citizens is there's and forward thing okay? market and was underwriting write Citizens They now would resort. not So of final XXXX cut. anything, has The anything, to fast rate last the a guidelines

So actually in kinds to $X.XX, roof at $X was construction $X.XX underwriting scenario were the the $X.XX we that trying Citizens had where accounts. general there. use going are criteria, If just of to and there market all at then fact, things or if is just $X.XX qualify or and I'm same is Citizens they

is mean So doesn't it's not complex. complex. remember, It It it's much different.

to So now. lot – difference through time that's takes the of the a get get to government entity it a but

has let's an That account one just it said, you market be, it move. can flat to account the it would lot slightly. to call Retail, down wholesale the the but Citizens, But say segment, potential it let's over you in flattish take E&S more has an that's commission work. to into level a In if from bring up the and slightly

So Citizens E&S remember, ex-wind rate they the where quotes we And in you construction, example wind-only and could lose quote mean Citizens the $X.XX the to superior I account the the can $X.XX. rate is you a have ex-wind – it an with it might its goes the $X.XX quote. go or and on market was scenario – entire the and or retailer because wind-only be

a has that commission and down gone sudden substantially get So all on of paid the much rate. lower we premium

it's Greg. understand important I because to it's how And difference. important you manifests And you wanted XXXX people difference little a more itself it that's that. think today big for maybe So between understand than it's a but the

Gregory Peters

Yes. That's great color.

of Just it fair I'm property, a to of when do is you percentage? say book, at but or XX% lower – your that I guessing that point clarification. it look it is think to it sort Is is right book Florida about residential Citizens is higher fair a now or of of

Powell Brown

now about sure that want residential make when you are – well? think residential, talking you condos or apartments about I I you homes, to and you as talking say

Gregory Peters

Yes. Residential apartments. homes, condos and

Powell Brown

Okay.

find in condos year. the don't no, it's and residential, a answer the So apartments specifically the half the short first lot there's is And presently. of think XX% in of I is activity what you

now a qualify. been down where market on. East are lot as don't have And not to they're and activity know of submitted going the there's but currently Coast So and up are to we but right E&S only I Citizens in that if going Coast, yet, West the that properties, said, live the you there

year that be to plays is this yet out how So determined. ultimately

Andy Watts

side that you mind if -- down about, that I might by this in think the on be a go Powell limitation on into just the the keep Greg, limit Tri-County, homeowners bit. I little Yes off talks

believe the I line the is think is number. I $XXX,XXX

$XXX,XXX lot $XXXXXX are So I a real think it's of down rest $XXX,XXX a the the many in It's state, believe there. about expensive then how homes of And them. estate limit. not is the market if you below Tri-County, very or

can not Citizens. actually everything go So, into

will around way quality. then of So of lot to there's only of in go it. things certain a all what lot a that take of the box. limitations And But they press as into there's

is reason the the market today we in So, different very color why was it what that all is than added XXXX.

about does and that to diversification speculation a of way organization, And talked what we're our not XX, been our there's and we've regarding we very the performed Florida were So Florida-based weighted really XX at as organization this pleased as quarter. a numbers. a in of lot the least very, lot ago. first well businesses Wholesale well both Programs. Retail years in We're But our

Gregory Peters

focus have really That's haven't probably feel detail. I'm And it. commentary could pivot, your hour-long this commented guess seen my just alone. conversation excellent come any topic GRP, Brown. around acquisitions, how releases I about I and going But and will making inside they're question on last from we like you on press Got I out to an just

the as -- acquisition is through So, Brown's that inside is in statements? are where we how reported see how -- reported numbers, coming do are or consolidated the we Brown through & GRP where activity

Andy Watts

should you GRP on website. the we but release & Brown pull press of a normal inside our website. underneath those in all there. Greg, Yes tag IR our come We They see footer, IR Brown those them over out got into that's

there. be should all they So

Gregory Peters

organic. it. point you organic. Got set you're taking GRP well, on in to Is has applying -- benchmark trying in part acquisitions organic a how then been on count to conservative it to your correct? And as that the approach of include not just approach assume same I you've that pretty

Powell Brown

Correct.

Andy Watts

Yes.

Gregory Peters

your answers. for Thanks it. Got

Powell Brown

Yes.

Andy Watts

you. Thank

Operator

comes question next Goldman from from the Sachs. Robert Your line of Cox

Your line open. now is

Robert Cox

my Hey. Thanks for question. taking

outlook maybe the employee to the specifically your for across for the to on moderate. year exposure curious economy of So your for broadly I growth continue just considering benefits, expectations to business was duration and the

Powell Brown

Yes.

but So a I clients. have not we clients on much of existing positive it look is inside outlook at way think the exposure the so in growth, we number growth of still

delivery benefits employee expand their helping will will be plans the and new to their new of biggest manage part people basis where So actually in the adding of that the to customer on plans but we're want base. a their people base we believe terms do costs net what our of growth they

Robert Cox

which signs in in as this most see you D&O acute accelerate professional And Thank the think in pressure, Great. E&S just follow-up any you. the I a do lines, of did rates? quarter? the D&O stabilization market is pressure And

Powell Brown

bit. did more we remember Yes. correct. quickly tip tongue this right the and -- decline? The than this remember I acceleration of my up a saw would in we answer an the rates property see don't were and That's off little sooner short is I D&O trend. And And yes but have going

they had appropriate the a level it So, back started was gotten people high in. to felt marketplace that as and then or though piling

Now, making side in to I'm one, Robert -- make CAT property the their am could those their earnings they if this out, and trying argument, like at in that those assets that looking I it they're and but pointing argument, a place professional that redeploying volatility not risk-bearing by have redeploy someone liability. on is closely doing portfolio, the assets to manage

Thus, price in professional liability. we're continued decreases decreases or having price

people position. that to of trying it. you kind to some taken that. not so trying I'm So have give on necessarily just imply I'm chew can you to that

Robert Cox

you. helpful. Got That’s Thank it.

Operator

line the from Yaron Kinar is question Jefferies. from next Your of Instructions] [Operator

is line open. Your now

Yaron Kinar

Retail Good segment employee you. goes My morning. Thank benefits. the first and question to

headwind think last that yet, the think, what out actually expectations happened create quite relative the on actually maybe strong. from And XXXX? a or some you'd Can pressure and benefits your called to you changed I quarter numbers talk I about employee then what potential growth this would for XQ came couple for in there? of quarters

Powell Brown

the part. you're first it. So, think No, today. for But XQ, do here it's XXXX? on as not headwind we we That's a really sit

one And in had you there business of -- QX what impact business go that we an But business encouraging said, in businesses was really performed really, that to actually headwinds particular individual that a in still was well. If headwind. QX. back the other terms

XXX headwind and to business. have lot a because businesses of employee QX, of of a before, function much has from a performing standpoint, of a And us little that that's benefits, in other relative recognition front-end as and -- new we employee in but that the said Andy a that better particular bit remember offsetting all loaded, one revenue benefits writing business of

that mean, about -- don't feel about impression I good I in feel comments. good and give feel P&C that -- don't Retail. we Please want we good employee out my to we lines So really businesses really the good feel our benefits. personal of take you too We about only our about our

we we because I the that But clarify clarified had also there's significant call is kind not did of still business there trend, just wanted the impact we there talk we've that. organic it, we growth was on But a in said QX on in mentioned of a a QX because people headwind that. just And and it, but bit felt were about to a overcome revenues that and like the which that. a

Andy Watts

we think we I aligned Yaron, And some fourth fourth we headwinds also those. in -- headwinds the anticipated our specialty quarter. quarter, of the the one see quarter. had in made in mention also businesses first We did

through. came So that

we the thought what of kind said we That's think be first much it earnings, modest at our pretty through. I the in as time would we on back But quarter. saw the commentary

we future on as And pleased don't those we modest headwinds. with a very, were very with X.X on businesses quarters. still material issue headwinds those So the organic those see

Yaron Kinar

second kind then, to year earthquake? my to with barring And full margin question captive we Got Is revenues. of think until the of as, Thanks. season hit of it the at revenues, fair of, an storm half kind regards it. the is least them first in

Andy Watts

do expenses higher periods have cost, much because but call wouldn't when we full claim are non-storm in in operating we it yes. margin, some margin I have they there, Yes,

Powell Brown

you make on, want sure -- to I you're knew and wind that's quake Yes. it. And make sure

much. very you Thank Okay.

Andy Watts

Thank you.

Operator

Your from of next question line the from Citigroup. Ward Michael is

Your line is open.

Michael Ward

Thanks, guys. Good morning. Maybe just following that up one. last on

$XX the - million the I to the premium the for of million mentioned $XX think but you earned captives think million. was had I you quarter, $XX in guidance

was in year, what's wondering assume for losses? just of So some guide level that the I

Andy Watts

to to back anticipating I trying bit. now Yeah, move and just little right we're a will we're -- forth think estimate it

thing when in other of quarter we some accelerated also period. that we year The claim the time during last is the third premiums recognized on had Ian's cost

into by around consideration. a move will little took That's how that a quarter. it bit So the we little

quarters bit a So probably exactly by down It in an each earned won't the quarter. perfect will you it be basis. see the third little of be on

Michael Ward

Okay. you That's doing to deployment or paydown helpful. ratio Thank you're get a leverage capital do debt anticipate management you. how much that much from And then targeted how about And thinking looking to? do -- you have here?

Andy Watts

first. we don't last one the tackle Why

part that of have acquisitions, both X. are you middle on what will back X we that time. at to range We're net as and of we debt organization. to the move kind basis to range longer with on we X coming continue we then then a it go our down. just publicly kind repay gross very look we is, of probably X.X kind that's unreasonable higher on a we One normally And basis. you trend That of and over down. for of And Michael, if around not and gross, operate along on normal So basis quarterly said and that back traditionally if is in time, a in continue period that business. the grow net maturities of look a will over to comfortable end range the

turn per normally will look to delever If about pretty year we is a you decent X.X back amount. X.XX

Powell Brown

and invest assuming, to in measure if and along. continue come as opportunities also But And business we're have that's weigh to we to to continue the yeah. M&A going they

Michael Ward

guys. Thanks,

Operator

& Your Woods. of line Shields the next is Meyer Keefe, from from question Bruyette

open. now Your line is

Meyer Shields

international we associated there guess business? Thanks, profile Is different acquisitions and they US? do income the legacy in domestic build I at question. fiduciary have direct than the more with the have small test One, income good look investment When than their placements investment the a we morning.

Andy Watts

have what much as in where here morning, good there's earn we your you restricted income even to again the to our only we earn interest US we also as in relationships that do a the keep Meyer. fees with carrier that, where trust mind in still you partners. limitations fiduciary No, internationally US. have then states up allow Hey, And and don't on bank

will us only those allow also Some of banks. on

everything linear see So a you on don't move basis.

Meyer Shields

it's a But saying rates function like you're the -- just to mix. that like year-over-year as improvement of seems Okay. opposed interest this

Andy Watts

anything and/or all that of now. that read nature was Don't yeah. GRP Yes, Correct. of that benefit

Meyer Shields

Okay. just And then to wanted something. I confirm

one the I that were significant comments, you're captive recent the reinsurance this that losses losses saying the LPI in has think there component? you insurers in catastrophe of and but mentioned no quarter -- in your

Andy Watts

you more -- please? one Can time repeat that

Powell Brown

question. of the that Yes, repeat part first

You exactly. I didn't were breaking it or hear up

Meyer Shields

I that Okay. the confirm want of captive. for some the is there we storm in I'm significant reason did were see to that reinsurance layer asking losses no just that lender-placed because market. impacted losses funded you The

Andy Watts

large captives are well keep not isn't. No. -- the as we they're linked They're lender-placed the on as No, with business. in side. there But our mind quake condominiums on not that have

we wind quake did there. in in So, first cost no, and have quarter. not And claim any storm-related the

Meyer Shields

Okay. Thanks so clarification. Perfect. the for much

Operator

Hughes of line question next the Companies. from Truist is from Mark Your

open. is line Your

Mark Hughes

potentially organic. and Thank capacity, an our optimistic Powell, Yeah. for -- Have little a you. that had suggested more programs. around months? the Good a that the change morning. on factor I be be think wanted capacity quarter a be last would to three eye you'd over seen keeping wonder I for you I gating be that might And last something you

Powell Brown

impression there's participant capacity. deploy But I issue this new every you found they market want could how like to the I that. or to No. give some their say that carrier capacity. is I is wish the evaluating think want don't we

new. are programs to risk very said possible balance more As volatility protection are for looking large that earnings a of not I They're just nothing for the have we looking CAT. earlier where extent group carriers of against

very that's and with so long we've So people results time. had we're and able of a over to good balance positive period really those a

like that that company. the seen effectively a a the result the capacity an We and we that expanding feel can have like our I've we've or we it growth bear considering, if repositioning had typically as that seen we're outsourced is someone don't in other than And near they've that of of of risk. repositioning, thing. they've in we said to past. are results to going insurance as which do better be because before top then delivered So results everything I and we fact that is as the the think but think list expanding

as of we found had around just keep of good a our able kind wind a discussions being as some and But have equally under there's cutting do little can get that lot capacity, no It's if cuts. but win I lot new. that important. people then to bucket feel a a Mark there's capacity we because view And of not of rainbow. we capacity cut get might bit little somewhere I is to a really which us gold like as capacity, keep the not deal. So that

about net And up so we're or on even a just basis, maybe slightly.

Mark Hughes

construction mentioned that. about for you its then And you good. Florida Thank sounds nationally? like How that

Powell Brown

Mark would Tennessee, an places, I'll you you remarkable. mean give around go places the I is, you What if system and look to Nashville, Atlanta. that example in mind tell come we Yeah. I it's

in up Northeast Boston. the in several get areas, You

You Colorado. I mean, get in Phoenix.

get all around going. and You got lot these a all places just in you

has is And headwind do work that industry lines so level dealer auto some and specialty in higher got units industry as dealer -- the about if the you auto it, think we're a in business auto a We are one that a down. dealers.

think So to on is or Their cars. There's levels below. MSRP coming impact an back about pricing it. down used

a And to rate so that's direct our increases. relation interest

having that's point some to at going that well. as So turn said

about there's other slight a for if you in that industries businesses but lot that's people. our So of -- looking a headwind are think

hard having tough to work think to a food, a the defined fast I like it's they're just dining if nicer anything because fine particularly seated. be have as business restaurant, getting that is in people is not tough. It of doesn't it's terms restaurant time but

Mark Hughes

impacts claims? you Yeah, yeah. final storm from gave don't winter revenue the question. I And know then the Andy if one

Andy Watts

we there did on out did the in break but again we nothing yeah the material we it really And some commentary pick No, it mention up few. Mark winter really, didn't services. claims from but storms, in a

Mark Hughes

Okay, great. Thank you.

Andy Watts

And Yeah. clarity those okay? sit for just services, in

Mark Hughes

All Yeah, right. understood.

Operator

question the Elyse from of Greenspan from Wells line Fargo. is next Your

line open. Your is

Andy Watts

Elyse. Hello,

Elyse Greenspan

Hi.

just taking was me I back. on mute. follow-up I Sorry, question. for had a Thanks

some of call terms earlier in and the margin. revenue of through in the up stuff came that thinking just the So, Ian just the and captive

So isn't margin. the captive know XXX% said I you

overall if I margin XX get you're margin point from and the right, So Ian headwind the the margin GRP, captive for was and I that and I is quarter. that, basis revenue million back add $XX the XX.X% adjust think I for about which I still a assume XX%

would I the margin been this balance tying I for still math little guide about will And did to So your down right? it have of then you bit missing, the tailwind. it improvement in What guess, year-over-year a over back have and am year? the NII thinking

Andy Watts

Elyse. Hi,

couple as not think things in are easier always in it parts the mentioned and year, It's the right? thought there's a there takes. otherwise to about it's maybe just everything think on full I There's business easy give We So puts was of we of everybody some moving is comments adding to items. couple there. up a else. Because guidance inside mix as and -- just just

trying year So to for what it everybody keep as organization. give the we're for simple an like would to what the is and just relatively do idea full look

Elyse Greenspan

is items when the guide some captive full stronger later Okay. within updated programs the embedded one-off we from I year. will be annualize that guess, here, until I guess, just in revenue from the right And then of thinking kind the year only, right

just three Are quarter income. that tailwinds guide rest help the could margins, investment there the full So in of updated any I like or and then for quarters? also guess, that in higher headwinds year the second other the

Andy Watts

comment yes, would think second I the think I be so quarter, in your fair. Well,

the Now right, to will level the from start keep revenue in captives, mind out. that

a going organic captive. the right, of to inside what we'll what we get we're saw in of each forward like is of basically committed quarter the So first benefit -- amount we going be writing to not quarter, okay? premium, lift specific the we're Because do

a of level end So of year. revenue that's limited back the in the nature. by That's why amount you get basically to

also, mentioned year bonus in we in and also Keep fourth one-time of Ian had the $X the quarter claims. mind the of that million programs last in we

when Just margins. organic and mean end in the year into take consideration, back those of might you're what about that on thinking the

Elyse Greenspan

last this what million Okay. $XX to one million And in one of last was that year then year year…? your the captive full $XX revenue

Andy Watts

it said million year. was about $XX Yes, last we

Elyse Greenspan

Okay. Thank you.

Andy Watts

Yes. Thank you. it. Appreciate

Operator

for back closing further questions no are I'd speakers call this our to time. remarks. over There turn at the

Powell Brown

Mike. you We next very you to to appreciate then. much, Thank to talking you outcome to time, with the look you. forward Thank everybody's and and we very quarter, talking pleased look forward

Operator

conference This participating. Thank call. concludes you for all today's

You now disconnect. may

Brown & Brown (BRO) 25 Apr 232023 Q1 Earnings call transcript