Earnings call transcript Q2 2023

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Operator

Good morning and welcome to the Brown & Brown Incorporated Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. [Operator Instructions] As a reminder, 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. intended current to respect results the the second and our including future for security reflect the quarter relating within those company's are laws. statements views provisions to with events, the Safe Such Harbor fall of to anticipated financial of of from in Actual or result those as or or referenced number currently forward-looking factors. the uncertainties statements and a subject to future anticipated number results and are may any made in a events of risk a differ materially desired include the results issued the release forth factors results that company's Such set finalizes determination press from its for its yesterday. as financial current differ quarter numbers the it preliminary unaudited the second in financial and in and to those from time Other Exchange company's Securities the identified risks have that factors company quantified may uncertainties time the filed Commission. not and with reports the or currently identified

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

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

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

may You begin.

Powell Brown

pleased per headquarters Board earnings and revenue, with revenue, are we've coming outstanding quarter very plans share in London the everyone our day, and call. the and our had and and European bottom-line our results robust QX quarterly the We opportunity strategic to total engage Andy strong reviewed Meeting organic an a earnings had with where year. and I GRP and years. first second We're of up with at top welcome the good for our then growth. half businesses Today, XXXX you, wrapped Thank to

After our about leaders our feel we discussions, our the even and opportunities here. better growth businesses for

total quarter. Now X. quarter Slide the compared We second let's of into over organically the as billion for I'm $X in get number results and the to delivered revenue growing on XX.X% XXXX. of XX.X%

contingent revenue of investment business calculation income, a commissions, or and other gains include not our As sales. reminder, income does on organic losses

per XXX $X.XX. Our adjusted adjusted grew XX.X% and earnings to our EBITDAC margin expanded share to points basis XX%

with XX,XXX the result for our our relentless customers. a M&A front, the annual revenues performance of six to estimated innovative of we On outstanding direct This teammates plus is completed million. by commitment daily create $XX acquisitions solutions

for X% XX%. Slide on their the lines XX increases similar to challenging quarters and be markets X, to the They spend Now, how excess overall insurance to costs. to for and up best continued and markets coverage, focused admitted on for very manage most XX% with and insurance remain Across recent to surplus customers. up rate marketplace

E&S rates remains area continue to exceptions to being cyber downward at and rates or public The workers more. decrease the a rates flat, and challenging exposed most property. XX% rate. are there down, compensation flat However, including D&O to continue consistent liability company moderate CAT professional with

more exiting seeing Carriers portfolios property and evaluate carriers Californian continue Florida admitted personal the and space. coastal to lines we're their

are E&S moving carrier. an plans written to might a consequently by and even As admitted of difficult, becoming the sponsored into been have result these more placements that properties space are otherwise state more

foot underwriters and due seeking same customers values. to the we higher higher costs. time, are and seeing per replacement see due rise square to to inflation premiums increase inflation significantly value continue At to Thus insured

loss buyers limits, decrease causing placement. to limits overall are a factors increase These certain or deductibles, purchase layers even within self-insure

not either away market, from have Regarding policies reducing improved, more that or the entirely. pushing admitted stepping to carriers and appetite materially the is their the is we This citizens E&S Florida market. insurance more market

investment customer business businesses leaders incrementally quarter, are of similar the a From perspective, feeling during second slow, in business continue level overall did quarter, grew year. than the QX of last and at remain rate and employees QX regarding hired quarter the to in inflation first the to any levels in of their the better they but cautious while

mark, to it to slow quarter. primarily continue the second during of the from deals level As overall M&A,the relates financial backers

come a result, But have down As peak. good slightly mean business that trade fewer multiples. valuations at that and for from high their bidders doesn't won't businesses we're a seeing

two three Capital six From announced our the the we quarter. completed during based - Canada; in quarter Kentro We active companies. great closing We which which in perspective, of the acquisitions announced United and of the fourth agency, the we here United in May, of remained acquisition Kingdom. Limited, Highcourt States in Breckles, acquiring a anticipate retail acquisition pending in the we

diversified and MGA lines, is and team the UK, and of risk annual with classes US Continental locations MGA Nexus of including revenues, agency trade, with in Kentro’s approximately an over a $XX across Kentro XX credit Retail a portfolio headquartered and primarily underwrite aviation. of London XXX, Europe, million in financial

Colin United the We're trade team his brokers Xenia, Kingdom. & in one of Brown. Brown largest its joined agency to credit retail have excited is Thompson and the

companies leverage sense financially. strong and are on we're culturally the a M&A identifying position high pleased and makes with Overall, that remains very our approach success fit quality centered of to that our disciplined efforts in

I'm X. number Slide on

vehicle rates. delivering to inventory growth due business quarter, had while expansion. by continued Most exposure business driven Lines Retail modest X.X%. and higher and This dealer Our new and levels services well, interest of face a organic segment was increases rate good growth of to performed business, our solid continue headwinds even

organic To growth give to points for some the approximately basis XXX quarter. impact the context was around our that,

segment around majority continued especially grew CAT a by over good quarter. with our the Program, The Programs quarter delivered Our organic increases, business, retention driven nicely rate property. new XX% spectacular growth strong during and of

Wholesale XX% brokerage driven quarter increases for and as lines business. organic business rate retention, of and most new by excellence of delivered as growth well with

Our and delegated great businesses open authority brokerage had a quarter.

the certain Organic to the our revenue Services higher impact X% segment was This by decline partially offset declined about external quarter for that processing due to for businesses. claims continue advocacy factors businesses.

nearly our we're delivering, share per growth In pleased points and summary, very adjusted of basis XX%. of nearly XX earnings XX% half organic first expansion of EBIDAC adjusted margin results, with growth

in to over discuss financial results more it detail. our Andy turn Now

Andy Watts

Powell I'll results our in Thanks, everybody. basis and day, consolidated good more detail. Great. financial adjusted review on an

earn-out in business change associated reminder, a measures As losses the divestitures. our integration cost second payables, and quarter and exclude GRP acquisition one-time for with and Orchid on and adjusted the estimated gains BdB

above the or We business to adjusted in the GAAP including reconciliations a the reflection in better closely most non-GAAP amounts of believe, issued press of financial enhanced items the can and amounts measures, The comparability. isolating appendix yesterday. the performance release presentation the provides be either these comparable to the of our found

compared taxes Income basis, XX.X% to adjusted year. income the quarter, XX.X%, for of before prior the were quarter increased second XX.X%. total an EBITDAC by and billion On as over $X growing the grew revenues second by

of XXX the second points XXXX. to XX.X%, as increasing Our EBITDAC basis was quarter margin compared

to our effective which with XX% of in expectations year. of the value tax and with the tax the in prior deferred rate market plan compared the as impacted by quarter rate was The current is The associated XX%, assets second quarter in line last year. the lower our for in was compares change compensation year,

net plan offsetting ratio XX.X% year there's in expenses salaries diluted approximately negatively operating basis expenses. changes impacted points our the mind, other per from of year-over-year. adjusted and Our Due increased related compensation share the income revenue Keep by within to to deferred value, market benefit to an in by last XXX $X.XX.

weighted for relatively performance our count flat XXXX. the as second average quarter Lastly, both outstanding. XX%, team paid of by and our Overall, increased by dividends share was to quarter the the nearly compared remained

grew contingent adjusted and Adjusted grew We're expanded our revenue EBITDAC to growth delivering last revenues margin significantly, XX.X%. Retail acquisitions profit the X. growth slightly commissions in of total of X.X%. and on number completed EBITDAC year, adjusted higher driven than XX.X%, faster sharing Slide segment by organic The

primarily stock-based compensation driven non-cash, profit by share to support lesser expansion our and growth. by was increased contingent This and the higher offset substantially hiring commissions, future current extent were teammates a to which and incremental of

revenue organic total and Slide National quarter adjusted We're XX.X%. and growth combination expense Through XX.X% had EBITDAC revenue basis growth margin number the expanded growing with moving adjusted over our XXX base, leveraging of another Programs our of outstanding points. X. of

XX. number slide on We're

adjusted with XX.X% delivered of Our of total XX.X%. growth revenue Wholesale quarter and growth segment organic an excellent

in cost non-recurring XXX some to that due slightly by points. second contracted margin impacted basis approximately EBITDAC adjusted Our the quarter

EBITDAC organic XX. basis number Slide contracted decline increased for quarter revenue by the driver revenues segment’s on X.X% are inflation. adjusted primary and organic by the was points. the margin margin The of the We of impacts lower XXX Services The and

from I've six generation We or generated of million the approximately cash allocation. months and $XXX comments capital cash over for of growing got a $XX operations few regarding this million XX%. flow first year,

from six revenues of year. months compared as to year, of months percentage XX% this in last the was a for flow of total cash operations first six of the XX% ratio first Our as approximately

of expense result by and ratio related year a in Ian paying As to that the fourth of this lower first has higher Hurricane we taxes quarter year-to-date discussed last of the as last deferred quarter we quarter, year relief. impacted interest the been

we operating that cash. said, the million With strong $XXX very quarter cash the was quarter second approximately generation with and of for being ended

outstanding we acquisitions our second levels. year, of $XXX we Orchid BdB approximately by committed we to more As our debt quarter, the making to and mentioned million. the are reduced In post traditional payments previously, GRP, last incremental of delivering

position delever. company, in and businesses strong We’re invest capital to acquire in to continue a great our

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

Powell Brown

Andy. report. Great Thanks,

customers inflation the We the operate. in rates in our in impacts continue monitor we and interest which economies on increases of to

their that customers they will how money will and quarters. are regarding the expect the continue spending business for trend will prospering. this much We believe said, are With consumers remain next coming We of invest over leaders still least few hiring and taste the our most of cautious at quarters.

year. similar buyers insurance CAT the in end of standpoint, especially to properties, due From the continued fatigue increases an remain expect through rates, insurance which we increases for

limit, With to decrease buyers these either certain limits. loss conditions, opt will cases deductibles in for market increase continue

as multiple capacity as a an programs. In and of MGA MGUs positioned diversification. delivered and for we've and with regard on they partners, provide to are carriers carrier focused quality allocate to to breadth results Historically, across good underwriting our our well to opportunity the remain flight capacity, uniquely

comments few well the underwriting incremental international as us A of expectations first organic they're our retain combination GRP extremely regarding and businesses will BdB. from acquisitions recent ahead which results We're The possibly with our support of to our and of year. these and the increase positions our our for growth diversification strong pleased capacity, programs. performance

on driving through leadership acquiring are the years, XX over continued The growth past M&A. active coming quality teams vver and focused been GRP high year has organically quarters both over the and businesses.

teammates continues to execute past Additionally, to like over our we'd great feel months. how we about all and that few deliver. the joined team business Overall, and us welcome our

more on is of and existing best hiring and capabilities win leveraging the focus Brown the new to and & retain Brown Our teammates our total retaining customers business.

of have year. heading second first half we great momentum the into the had a of half great summary, year and the In

it open With over and we'll Michelle it that, up for Q&A. turn back to

Operator

Instructions] [Operator

comes from Bloomer question first with Our Weston UBS.

is line Your open.

Weston Bloomer

morning. is on thanks. growth. segment My question organic Good Retail the Hi, first

about that point You’d you impact quarter. what was the for in XXX organic just a the the can see disclose to in headwind how headwind the XQ? headwinds - given in highlighted thinking remainder second there, from say that year? half, in that you're lower you Or given just And, of property quarter? those the services outlook if second dealer basis may curious, the Retail I’m be is took a fair

Powell Brown

some of last context for we colors Yeah. this had quarter. Hey, probably this in is, good that And morning, headwinds range. we and as see to mentioned well the range that basis the little we did first about year XXX QX XX of was during did that points in as bit of back had dealer anticipate around the QX services it in Weston. a Still we

course. year Services for those we fact by of on were now when business the about we the released last through last Dealer was we year. third of back If earnings had and the And starting the in X% year, late quarter see XQ the talked that about fourth kind to headwinds we you of in kind third the last quarter continuing quarter saw end of of through the impact and recall,

gives at you the of idea is. an kind look you impact organic the when what it and So

into consistent as head headwinds now we on had of a we in see second the year As basis business. of Dealer the the half QX comparable or of we now similar don't commentary the with year, and more half in the get the Services for second to we same level the

We really are, just of of well, little are our go a to businesses. but they're there very, right investments proud cycle bit They great made significant we in capabilities. they and a very businesses performed those now, into overtime

Weston Bloomer

the of third And the sticking uplift maybe fourth second is And quarter? you can business guess, you maybe how Got or remind retail, I property it. that in quantify on weighted quarter? you. from quarter the XQ us just to much Thank relative saw

Powell Brown

of quarter. the probably And the than pretty talked the quarter. level what do CAT we in potentially, significantly property is we than consistent we what quarter almost third we third second quarter granularity, But is, play about disclose the Yeah, about that last we past talked the Weston. do in in in third That's year. we've less more don't what with see a second

when it's the well lower employee in said the normally of the CAT of why we because when we that the half that see as quarter. generally year bit little of amount first property, second versus is half first organic benefits our - So the of year the a as in

Weston Bloomer

professional to last move we the point to that pricing you professional we lines the and headwinds maybe lines. within half? that given just And lap close the just starting you. as seeing Thank could into we're lower on where Just market? you're second the expand Great. one on Are more in broadly what

Powell Brown

it's Yeah. downward would really it's pronounced. Weston, is, D&O. what places other not continue as pronounced. pressure to on where In I say public see nearly That's we

- will still place know? But really one Don't see Yes, we where in we pressure? that's market. for that's extended an see do the So, continue the but time? of that period softening real the

me near of in term, the And to we're kind so, tell to instinct that continue pressure would that part to intermediate the my see space. of going

Andy Watts

you the out our quarter. one softened the call commentary It's Weston, we probably in it bit quarter in actually deck. that a see the that second versus more, Yeah, little first did the

a go more bit little So potentially. it could

Weston Bloomer

color. the Thank Great. you. Appreciate

Powell Brown

you. Thank

Operator

Zaremski Please Michael next question question. The stand next by for from the comes with BMO.

open. now Your line is

Michael Zaremski

parts guys Hey. challenging Great. on have up to deck topic Good touch a in morning. brought the the that well within you Wanted as of about placements in certain marketplace.

that beneficiary? of any So, could we're isn't lack capacity thinking lack some much is net- now I and - impact we your potential the should rate pricing there just net know, revenue of there between there's growth in a a July, - net, or for net capacity maybe be Brown is big higher that that

about challenging in Just kind on of should nuances year half of the curious the be if thinking we the marketplace? there's any back

Powell Brown

Right.

it is, at stage in business what business a expiration is right very for with to insurers this, now. to limited happening the getting market time or instances would And close way let's I back the on are renewal even us look and what's new Michael, is very the the date. many So, set

customer. there's lot things it a that and quotations a activity So analyzing of around give like before limits we to and

with of buyers, for I've which a increases - in have six fatigue CAT also and you in from property particularly this row. that had marketplace also inside - years the we've said have five

would a - constrained scenario. There hypothetical storm. be do think capacity That is dramatically this depends is, if going in QX? that So, tell there's is what I we a is you to the

than don't do hurricane if a have we a that's a if hit Florida, different Florida. have hit So answer hurricane we

answer question can't right now. we that So

insurance the two, Number Brown uncertainty broker not at can't point of does that basically a is Brown there just say, more any what any take which is, increase. I also & faces, buyer

placement, in but might can't may a So they cost. their take they what to lower buying where anymore property increased a certain happen layers self-insuring or is, limit they've point gotten be

building. So, increased more driven the just by that renewal growth business our at than on growth be new would point

market. the you with a specifically of I'm that this, would outside what lot new little weather. how it's pleased a and tell would performing say writing question really hinges our So a business. retail I very that things are upon of is challenging I bit control We're

think is hurricane don't did to a if the have discussion itself we we something season. other in that have to areas places. or any going sort so will market And out. you're now scenario, flowing other with It’s and state to Florida going and different Florida relative happen State around that the and of But to into i.e., hopefully because the a not pools coastal much citizens have the business between

Michael Zaremski

That's an there a ultimately margins parse should question assuming higher easy we of helpful seeing Program commentary. which on, help the contingents out. share we I know in guess My higher. it's the margin follow-up drive National I'm to I and not segment contingents, see is are can

back and the So just any business property commissions contingents on towards specific any weighted for company, contingent more the sustainability or the on commentary stepping - the or lines? maybe if are overall

a meaningful to saying, And year go-forward lot thinking, I ROEs insurance mentioned historically. which been carriers be I year for much you are they hey, of and kind is all six we of are have the or on business than rate of basis outer guess, property five side was increases, higher a of looking we're when expected the this at forecasts on the just

future a and in well, that curious just other in of maybe contingents, Brown I'm as give could So, brokers lift years. kind

Powell Brown

Mike, bunch there. got a in Okay. you

Let's some of unpack we can those. see if

to pieces two of there's this. first start because maybe Let's with contingents kind there

you'll million activity. That it's take by year-over-year. about primarily the is driven first acquisition $X Let's that see up retail and

kind to expect we've bit year. would one contingents and the growth of that in quite year the back we a out end of of anniversary, see drop year-over-year most And GRP made of that level now off should as of the

gives color a on little second hopefully that you the So on retail. quarter

relates Programs, so it a to National going couple on. As there's things

quarter recall year, estimated adjustment we you Hurricane $XX at million know quarter said, were called program. in remember If contingents for for a that if fourth the last for of programs eight costs you I think had don’t Ian. losses we of we that third with out claim or about stage, did quarter in the recall our we one at associated

we When actually year as And contingents through on did we're is is as earned there, thing. released a now, which at quarter getting not some the fourth good earnings, high time. claims. as was estimated we we're development we It seeing end the those what

or okay? So the that then in about in National related estimated this take are last higher in when year, year's split you so second adjustment amount. And other we we commissions $X that about ticked to for half accruing million the up quarter Programs, to half the

So That the would quarter anticipate million fourth the not that National Programs, and in $X we’d in was you second quarter. third primarily see really isolated to for increases contingents okay.

mind, that quarter, adjustment comparability have keep we made we going for in the again, you the okay? to to Now are when get third last year,

Andy Watts

would season, their that there if leveling moderation think that don't in an you would there The on year. or in I’d this high a like even spoke might And you kind event you is that a on view be a a this I at, comment also next about to call I rates this. levels. are would they general. talk hear property today to view we our and rates, property in property possibly to bearer make risk And all honestly pricing if times slight what around of have

qualified in loss every are I that every on but back of to as So, the or contingents driven contingents, want not mind you of for keep placement experiences. the your just program not and kind

out you ex got obviously, higher losses sustain can you So higher the a qualification. rate, before you

is clients So that we time. a on just thing, it our in the talk that keep mind the about to because property all thing

that up rates? one property How, happen time after to going you process? time thought type after of time, are is relief? that to comes see going know, we is thing there what's When some If to

Powell Brown

- Mike around is And of ones which you that on earn you other is kind question ask it.

and industry you'll not general earn is a employee kind business, just that on fast, rule, incentives in by. But the we supplemental lines and As this then then a all the but and commissions a to depends it. kind that's direction rule work guaranteed hard us give to inside incentives, does not see upon and lines normally the of of Normally, just there. you benefits that other thumb it of are are reasonable individual at contingents least to

Michael Zaremski

Thank the you color. for

Powell Brown

you. Thank Yes.

Operator

Peters for question. question The Raymond stand Please James. Gregory from with the next by comes next

line Your is open.

Gregory Peters

bigger and maybe going personal Powell business and in us California you personal afternoon, give because amount I guess, Texas, lines challenging. and a talking Brown Brown a Florida, property I market lines on Good called far on Florida, Texas, so Great. out Andy. just some what's slide and & the think about is fair spending time in California. back perspective the organization of Powell being step and much And in X,

and size business footprint? us give Brown you Brown perspective & some inside fits bigger the up how Can that

Powell Brown

Yes. Sure.

you Just that, lines of $XXX context our organization to a give of revenue. about personal million inside on

Andy Watts

In retail.

Powell Brown

Yeah, In retail, yeah. sorry.

And wholesale it so, do talking in have programs. also lines personal a business program, I have and in when we we that, about mean we're

Gregory Peters

it's so I Texas, about coming - what’s the impact, about lines just it am what, for you what's magnitude to event what country & in or guess, may different Brown. the the retail the happen as Florida think across personal an mix? if about, a speculating I programs million you're not $XXX Brown wholesale at talked event understand that way, because Is in there's or trying and Or an as I and

give think on cactus Maybe you second to for in could related last year that. the an Maybe, I those of issue an that an to us half update talk the you entry you use were could about as Ian.

Andy Watts

the - had context to a we’ll Greg, see Yeah little personal the we maybe to lines.

a coast. the XX good kind the of we've And Louisiana of right? the been we for If personal months into start headwinds north and this you Texas. so while, or then you bled over in on from of and lines facing and of that Florida, west that that the when And ago fires had is, all California, declines recall of was process part so

And so, numbers our of that's been while. for some a

it that We've our into anything read business. through that in don't The working impact percentage-wise our would that's actually the in comment where think to now see been saying, And wholesale you So moving we're or probably the the this way biggest we is larger in business. in past over about into are there those. back properties our incrementally actually we Powell’s plans. state one sponsored headwinds see

And admitted about pulling back that earlier E&S the discussion back policies is at out forcing to our the space. carriers certain markets, into some

our so, seeing in we our in that's wholesale submissions our uptick there. are And binary and business actually some

appetites they on. So, readjust decide how don't change that their Carriers and know long continues to portfolios.

once, definitely it the which wholesale was at headwind really is for not good thing. in business, least a But is, a which

Powell Brown

to captives? the that make also all about want personal talk I you you over business before we that Andy, country. a comment on I understand lines the Can have

that it So all trying to Greg, I'm so could in on color there, the of the you our not personal much based of or say what lines kind it is California, three could states. two those be be around is - to dynamics it give that say Island, to can Illinois, in in could some marketplace, the Northeast, Long Colorado, in be it can in be Florida. can What be we're be it in

that of impact the saying. a What when trying California, farmers getting state people sponsored lot in carriers, the is, homeowners. markets potential pulling homeowners Farms state That's impact, that for out Allstate not or writing of see to creates a basically say you and of we're challenges and like what big admitted State the like are we're

Do you events? and like captive about want to captives talk

Andy Watts

add extremely And Greg, talked Hey, think on Yes. our one we've before. powerful. is other We diversification this calls piece. about

just headwinds of we all the we Eastern And business in first and lines the last of California, way - know, year et in quarter up Seaboard. bought high-net-worth outstanding you about the the primarily the end at discussion know Working Florida, so, you mind, potential they as Southeast cetera, a focused on called personal keep the here

is well. growing really business That

well. there's we while have what perfect So, going move and can diversifications that if our of organization, a because lot business every just headwinds, day. make But to have we want and how are that That's sure that balances we everything of that grow about out. the we forth doesn't things businesses, back hopefully that's inside everything continue to also work

just a you. perspective for So little bit of

On the us. quarter captives, good for another

to full So of our Recall, We last policies really premium started this the got last was of meaningful organic of quarter year. quarter. the of first in we growth. kind writing the quarter up fourth basically written at end

before, impact $X.X be will will about As we the said organic quarter. that had fourth minimal organic benefit million We of have in this quarter.

around the down will be the the And end XX what of the previous to there we're We happens come back if still gave. think on we to that. an end year be high this we storm happens upper it'll or said coast. west of to in with then somewhere activity earthquake of XX, guidance that think We going to be range in the on

they're thing. the which expected, line But with what is right in a good we performing

National Just in cost we when recognition of claim the in mind, keep accelerate Programs that third we to is year we the quarter premiums had. with get did last the

organic the of okay? will as in $X actually $X a that this on the comparatives, get on million about third we So to quarter headwind million be year to

Gregory Peters

structure that's structured year? change you. the the way looks I close captive what of that reinsurance any way your with and the profile on loss the the there loop just for Is commentary. business Thank the remainder

Powell Brown

not No, substantial.

year bit One were was a is, market last year. little we on couple to pieces see the a pleased I reinsurance it think orderly than that. was that more this

we which And maximum got actually our kind to of good. back is they're put our we then, back were So treaties in able that, of reduce place May the frame, with in time before slight all reinsurance exposure.

So, good the as are that well really they've The we captives how feel the as organic about profitability. delivered, kind performing. growth of

Gregory Peters

Thanks for answers. it. Got the

Powell Brown

you. Thank

Operator

Cox with Rob question. Goldman for by The next from stand the Sachs. comes Please next question

Your line is open.

Robert Cox

Hey, thanks.

for of you're if and from in in seeing Curious, levels some data economy July? seeing dealer And continue the that the that headwind to were comments moderating so services. the far what presentation back in half. view aside moderate in your So, economy XQ from you're the the informs the

Powell Brown

I Yeah, because here out interesting are spending tell go when money. you you in people Rob, restaurants Powell. this, Florida are or London it's and in you're it’s or packed whatever would

we're that the probability what the approaching I've just the are economists lot they of and to so, of kind it of talked customers the a year, dropping recession and a hear just And half saying I of and are I tell second are about cautiously. you just lots of that would

That said, recession they're and we're a a see. mean into of bit It's wait everything a that doesn't going - little anything. or

have every think do July So, we But me, more data That's I I rather in I than tell interpret - they're how data we that. don't an of day would it's no, instinct don't. I that's that in real-time businesses. that's - any seeing something that really, think how their

Robert Cox

There's just a submission color They're a Maybe it in change give little quarter-over-quarter. on Business bit, it. what but Market on I growth the and accelerating if share us think a little I'm Got commented growth. curious follow-up gains? that Was drove on Thanks. really step substantial a just it wholesale. you Okay. growth? organic you more mix?

Powell Brown

in a with mean also retailers. business QX property up retailers. comes necessarily doesn't of It our lot Brown think that and a I independent business, that's that you everything actually. whether it little bit retail of have, wholesale with Brown in could be business if Remember, it's our in & there's but

number just one. there's of a So That's lot property.

standpoint a two, Number I that good. submission, very from of count it’s think

think we’re pronounced, that you of having a by which a just a those so some So certain wholesale. and the XX% areas put in together some and quarter and opportunities doing little I of we're opportunities a ratios think higher but and in and it's something uptick you not increase all get it's for organic lot I growth, race that in hit getting great with is

Andy Watts

year, which quarter is tailwind second in we’d earlier second headwind a personal but actually this lines. quarter Rob, in was of about Yeah, our good. last We coming It the had year. also, of

also organic to that So strong growth. contribute the plus helped XX percent

Robert Cox

Great. you. Thank

Powell Brown

you. Thank

Operator

Securities. from next by Mark with The stand Hughes for the next question. comes question Please Truist

Your line is open.

Mark Hughes

thanks. that that morning. broad of most within that submission the Yeah, higher count, Powell, is or is wholesale higher rate, influence Good hit property?

Powell Brown

But have much you're mean, and has it's entire in think that. point that that there. reading the positive ratio into don’t a across is got I too you I rate uptick can in But of you and bound quoted know impact. I the your platform. incremental sort an

lots You new of have submissions.

depending what state personal lines, admitted you're – to the plan, let's A made in of a on where just terms sudden things carrier a comment coverage going hear going you color they one Two, provide marketplace, on you providing and be your non-renews may the homeowners, use the coverage your E&S for of the if enough and market. state may about one, Remember, in on your not may plan, all into you state may Andy a even the therefore of you, be

just is being the there things in those in disrupted, of E&S. creates more lot turmoil market unique of a dynamics because So, that opportunity sort or of

plain and simple. Just

Mark Hughes

million from perhaps? captive have And the quarter. the Can the from that it’s quarter $X.X positive to quantify you Understood. mentioned this going benefit you third and that in impact Andy, then it

Andy Watts

No, – morning so the Mark. good

the the quarter. was organic the the year-over-year from benefit to million So captives $X.X second in

Okay?

Mark Hughes

Yeah.

Andy Watts

we the $X $X a claims cost of the have on we last When we to actually in headwind. third million revenue third projected quarter, the with the premiums because to get million accelerated the that's year. recognition connection the get of quarter third we’ll And - to in the when

no idea any we get – will have have quarter. storm if in happen the if source what third I You

we're just it minimal will be, which quarter write there telling of quarter the we of year. be in of last wrote And is this organic what a the is that which going now. then quarter, fourth amount kind we will right the fourth benefit know you same to We're because writing we're four premium what the of year, in specific in amount

Mark Hughes

on margin this year the for thoughts updated XQ results? any for and then, good with year the And Okay. full

Andy Watts

that and But No, always up the pleased and results said at whole outlook year with we things the overall we of everything. about move second real quarter We around. business we're quarter first outlook. changing the not just the stage can very for the the end would and for adjusted feel slightly our good and the be year

changes right to potential that feel for on front and But growth. going any the good not major have now. we're very business no, about But profitable

Mark Hughes

Thank you.

Operator

question. question for by next Wells Fargo. next Greenspan stand The Please the with comes from Elyse

line Your is open.

Elyse Greenspan

you Hi, the loss want the terms the some dynamics Appreciate expected by Andy, just thanks, in guys the and on underwriting Good the have color deck I to the captive. risk. understand provided revenue, morning. My first with of question is QX quarter. on disclosure

if if So XXX% that year, it I no losses correctly business? this - that's a am margin about thinking there's

or you Are you million year $XX occurrence exposure. losses, I $XX us guys per as some gave million know per assuming your

Andy Watts

no a that There higher retain one XXX% and running no, is, on $XX margin things we’d if will be up is on captive of there's couple what we occurrence be not is, of storms But that said to cost margin. the are Elyse maximum actual – do $XX we a per million. there. We there have front. So insiders million

We’re combination year on quake event event through million either $XX there. capped a wind or a out at a of that’s this

it it our on you the gives revenue least, you we’re an a end of gives of range. at higher So idea

have well still Because period that read before, very the as completely to for That's the a contingent. mentioned things idea don’t these outcome That's participating. captives, performing And while really very, with in long programs an two over for of on we identical the they of is we're get time. we're top captives. potential - on we a profit these created name, can actual we You go why that put them. participate we sideways why

underwriting in participating We're the profit.

some you'll volatility are right but So designed. see see - we back now and as it's they forth, you'll working some

Elyse Greenspan

you Thanks. seen to was, contingents drove I answer contingents quarter? believe would which related just expansion right yes, is flat, if been the went margin year-over-year. segments, wanted guys I the And through my have had you the question in If the still then, in the contingents to stronger confirm that.

Andy Watts

we your That still the if we would the incremental in and quarter. have because in answer net that seen is other you income, would the be out yes, an quarter to expansion margins expanded might the is, margin question investment back absolutely, yes, be

feel the about performance. So good really we

Elyse Greenspan

Retail services, in And retail Great. - two second right, related last then, QX just the you of growth to rest and guys the pieces us in so, one the the you quarter? dealer sense core benefits. give the segment, call the segment, of a between headwind the the Can rest there within the did out of the

Powell Brown

repeat that Elyse? you Can please,

Elyse Greenspan

dealer retail? from pretty in away each the perform how - saying, the did versus rest of retail were organically, was like benefit I services, Sorry. close the within both to QX benefits was they other

Powell Brown

Remember, you the Yeah. that answer, both benefits. first No. with we so sometimes know, just all, QX very The impact and to in dynamic relative benefits unique has - a QX. the also it of into pleased employee were and commercial is revenue impact employee can recognition

it think don't I I I time. a although of period So look an on over about don't extended quarter-by-quarter basis, at have, I it

on yearly first half be it QX. I basis. could either or a I'm the sorry So mean,

employee with benefits pleased how very and we're the business so, business And performing commercial Yes. is there. the

Elyse Greenspan

you. Thank

Powell Brown

you. Thank

Operator

with Mike the stand by Ward Citi. next question from next question. Please The comes for

open. Your line is

Michael Ward

on Florida, any Maybe Thanks morning. back it's guys. you not mentioned, getting better. Good just

to to their do from they something need Just more lawmakers, see law the do curious to have interpreting get need that guess? wait to is done is more or just season? the I we see around need, there that be Or wind carriers

Powell Brown

No, potentially don't always case. don't that, I think that's think help. Mike, that I I – mean, But I the could don't

in is, losses it the not of players the last think just is, Florida in in really terms popped have five I six or CAT have participated that what prone remember areas been years.

we time a I sound really kind distance. know little will this we what but and so, And need don’t is, need of interesting,

up. them to got we So catch give

a them Let catch break.

we as XXXXs time, good. went so, through property where said, we late went period and the through was period had but some XXs a of market early a the in the XXXXs, storms I early in we And then where

the And competitive. money over is market then is very so, the made five and there you risk or six years there

It's driven cost. partially risk think experience and panned being their by driven out and that's reinsurance being just by the like hasn't a bearers also loss

season. would are stabilizing a big about up bit as do think we is, which now? they see want you to event event, Or the we but don't do I we slight That's see a watch of little rates? see storm And not it. rates think going decreases? phrase I the we we what big have nearly Do we some how a in don't much as But if then, event we So, have won't. that

Michael Ward

Super helpful.

acquisitions GRP and year. you're So, other last with and it so sounds very European like happy your from

sort of going of how part forward. that they'll those can you the on you if see be now wondering Just comment calculation organic impacting

Powell Brown

Yes.

out would I okay? GRP remember performance by but lapped and we business, laps - with BdB don't X/X So on don't And I on so, X/X, is, we the break we that address specific that for way believe be basis from both. a margin we're or division, very GRP matter wholesale line and overall that performing and organic it and BdB but pleased both the retail growth basis with is in a

Michael Ward

interest last on Okay. maybe one Super just income. helpful. And then,

curious on guide the just Thank comments you. back I'm any year. You've the for your already exceeded full half.

Andy Watts

in The But here some US. in this happens Mike. interest primarily at what kind look the - central for rates of decent probably upon the morning, the second quarter if - good on a now, with rate it bit one of and I guess, a Hey, depends upon we major what banks recorded, is and there. interest right that’s the cash you don’t move run anticipate around our may we balance based what movements but little probably any rates, and UK

Michael Ward

Okay.

Andy Watts

Thank you.

Operator

comes the question question. Kinar with from by for Yaron next Jefferies. The stand Please next

Your line is open.

Yaron Kinar

question GRP comment in last if you thought to to in wanted performance. I you that I had back acquisition everybody. they morning, go Good time And you last the and those they that earlier, for that I it. of your at Thanks. are on expected. just – better than thought BdB. I said with division’s line the actually expect could I performing that you with said the line the are maybe perform the to in businesses division said misremember you that

Powell Brown

remember we forward. Are different think two businesses, I things. yeah with talking over might are about minute, are – be unique and make the about of we acquired the talking we part that very we XX a to we're performance good so they wait performance is, want which going Well, very pleased here, just

in but core we that - basis, perform I it believe about on in the would when let's we believe line, better. perform we they So would possibly that line, that talked announced

with little a line in But bit with line the in and performance performing divisional is, better are but with what we're divisional reiterating more I'm the that. pleased they performance

Andy Watts

deals, the around see the or performing the really intertwined of when line business And Yeah. on maybe this. at the commentary want bottom-line. kind top they're pleased topics growth We're guidance those didn't the organic so, not on very and with the to margin and our we very, the two announced was on how the Yaron, we versus expectations gave time and

that And the the line perspective. divisions inside businesses to related they're expectations of are in margin that with the for a right from margins reported our

performing really, in and both we're with the over here. how is So, the team really businesses pleased

Yaron Kinar

helpful. that’s clarification The that. appreciate you. I Thank

Powell Brown

you. Thank

Yaron Kinar

passed talk is in in well be can or in division out? and on, the you with it about, then relatively you be any Kentro, there there to how expect expected And line maybe what margins seasonality revenue which

Powell Brown

Perfect. Yes.

So, relatively evenly is, around year. the portion trade businesses through A of meaningful is that overall, weighted credit. the business

or anything. So quarter one it you sounds of in go like kind well to see it something

kind it even. nexus relatively you Retail, The Programs between the the then which business were linear the and look again for similar margins the and for it. of portion pieces to businesses overall and So two there there. And comparative have margins in is at this of

Yaron Kinar

will be have kind the of business? in you do any And and revenues the programs of the retail idea how distributed

Andy Watts

retail about Yeah, XX%, with it's Yaron Oh a side. on the residual programs, sure. XX%

Yaron Kinar

much. so Thanks

Andy Watts

Thank No. you.

Operator

by Woods. Meyer question. with The next the Shields next from comes Bruyette & Please question Keefe, for stand

open. is line Your

Meyer Shields

Thanks. Great.

I two quick think So, questions. really

that significant ten talked lines just wholesale pretty liability are pricing? in And are rate casualty Is about competitive the First like presentation, the down other a you down that to to or it like there ten. shift. ten professional moving seems up

Powell Brown

just could a more broadly I that. it's some - it than think be of

competitive. it's is, it yes So,

Meyer Shields

wondering weights what all question should guess, tremendous debt I was to expect bad heavy It’s I we Board. picture Okay. together. too them. Bigger the from

Powell Brown

that. deep we're They only understanding Brown about the both Well, all, the overseas very Bronek exposures, that, would Brown in very I want think underwriting, just other but Paul and we also Brown to & Masojada Board. them first like Krump has think highly States industry not I that expertise. And like the have any just things but & them. pleased joined have that joined and of go member board you very They of United consider not Brown

known expertise. that industry But their have with worked highly they've I meeting, added the to These out pleased of very want our board first we which are and people are something and and board have was We already very don't in of to to context. you last take think week.

great So, of we're forward really, many joining really from with look them. of to and them both of contributions Board years really the both

Meyer Shields

Florida, know treated I Okay, throw is can one but in prior people and in question. approval. I think last quick use as I helpful. technically pricing file that's

actually and more have file Just state they the attract either sort change it insurance go receptivity actually and on back be of use and insurance impact truer things. company legislature the department part a or there competition the make any to to to Is of disciplined by the to bigger don't market?

Powell Brown

into the of to then citizens. and ways the exploding I you retain Commissioner are know we're carriers all I'm aware and that. Insurance growth Florida attract new Meyer, ultimately CFO thinking and will now, conscious about because the not underneath in CFO. existing office, of they're in Insurance Right the that that carriers not, the of of is tell Florida very the and I State governor's of State the they that Commissioner

the so, to aware it. is, answer we're And of the no, not question

to that to actually a to not, to more carriers not However, Florida I assure terms stay about State specifically, more thinking can you but the it environment. competitive question in bring of carriers ways create they're that ways get of and

Meyer Shields

much. Okay. you That’s so helpful. very Thank

Powell Brown

Absolutely.

Andy Watts

you. Thank

Operator

Brown the Now, I Powell call remarks. for to back to closing would like turn

Powell Brown

very you Thank right. great. That's All much. all

exciting at to and we year. Brown We you forward look we quarter got and very are quarter. the appreciate an look Good third next of your lot going And a to with to Brown of said We and pleased we things cool day. as time. the & talking fourth forward quarter

Operator

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

You disconnect. may now

Brown & Brown (BRO) 25 Jul 232023 Q2 Earnings call transcript