Josh Schenker

Josh Schenker, a Research Analyst at Bank of America, inquired about disaggregating Cincinnati Financial's growth between new agency appointments and increased penetration in existing agencies. He also asked how the company maintains its unique 'Cincinnati experience' and cultural intimacy with a significantly expanded agency count, and about expectations for agency appointments in 2026.

Answer

President and CEO Steve Spray explained that while new agency appointments contribute to new business, the focus is on long-term relationships and deliberate expansion with professional, aligned agencies. He stated that Cincinnati Financial's contract remains exclusive compared to peers, allowing for continued distribution expansion without diluting the 'Cincinnati experience' of local associates making local decisions. He noted that field reps maintain an average of about 14 agencies, and the company is adding more territories rather than increasing individual rep workload. Steve Seloria (Chief Investment Officer) directed Josh to page 42 of the 10-Q for specific data on premiums from newly appointed agencies. Steve Spray concluded that the company does not set specific goals for agency appointments, prioritizing quality and alignment.

Josh Schenker questioned the decision to authorize a $1.5 billion share buyback, asking if it implies shares are more attractive than tuck-in M&A, or if both can be equally attractive simultaneously.

Answer

Powell Brown, President and CEO, stated that they constantly evaluate the intrinsic value of their stock and the best long-term value, considering buybacks if appropriate. He emphasized having options and evaluating both buybacks and M&A based on cultural fit and financial sense. Andrew Watts, CFO, added that they have a rigorous, disciplined capital allocation approach.

Josh Schenker asked whether the $1.5 billion buyback authorization implies that Brown & Brown shares are currently more attractive than tuck-in M&A, or if both capital deployment strategies can be equally attractive simultaneously.

Answer

CEO Powell Brown stated that the company constantly evaluates the intrinsic value of its stock and the best long-term value for all parties. He indicated that they would consider share repurchases if deemed appropriate and that they understand the financial considerations between buybacks and ongoing revenue streams from acquisitions. CFO Andrew Watts added that the company employs a rigorous and disciplined approach to capital allocation, considering all potential deployment options.