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    Brown & Brown Inc (BRO)

    Board Change

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    Business Description

    Brown & Brown, Inc. is a diversified insurance agency, wholesale brokerage, insurance programs, and service organization that primarily operates in the property, casualty, and employee benefits areas . The company offers a wide range of insurance products and services to various entities, including commercial, public, and individual customers . Their offerings include professional liability, flood coverage, and excess and surplus insurance lines .

    1. Retail - Provides a broad range of insurance products and services to commercial, public, and quasi-public entities, as well as professional and individual customers .
    2. Programs - Acts as a managing general underwriter (MGU) offering professional liability, flood coverage, and other targeted products .
    3. Wholesale Brokerage - Markets and sells excess and surplus commercial and personal lines insurance .
    4. Services - Previously contributed to the company by facilitating additional underwriting capacity and generating incremental revenues through capitalized captive insurance facilities .

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    J. Hyatt BrownChairman of the Board1993J. Hyatt Brown has been serving as the Chairman of the Board of Brown & Brown, Inc. since 1993. He was the company's CEO from 1993 to 2009 and its President from 1993 to December 2002 .
    J. Powell BrownPresident, Chief Executive OfficerJanuary 2007J. Powell Brown has been the President since January 2007 and was named CEO in July 2009. He joined the company in 1995 and has held various roles, including Regional Executive Vice President .
    P. Barrett BrownExecutive Vice President; President - Retail SegmentJanuary 2020P. Barrett Brown was appointed as Executive Vice President and President of the Retail Segment in January 2020. He joined the company in 2000 and has held various roles, including Senior Vice President .
    Stephen M. BoydExecutive Vice President; President - Wholesale Brokerage SegmentJanuary 2021Stephen M. Boyd was appointed as Executive Vice President and President of the Wholesale Brokerage segment in January 2021. He joined Arrowhead in 1995 and has held various roles, including president of Arrowhead's Commercial division .
    Julie L. TurpinExecutive Vice President, Chief People OfficerMarch 2020Julie L. Turpin became the Chief People Officer in March 2020 and was appointed as an Executive Vice President in May 2021. She has served in various capacities at Brown & Brown Absence Service Group since 2012 .
    K. Gray Nester IIExecutive Vice President, Chief Information OfficerFebruary 2021K. Gray Nester II became the Chief Information Officer in February 2021 and was appointed as an Executive Vice President in October 2021. He previously held IT roles at BB&T Insurance Services .
    J. Scott PennyExecutive Vice President, Chief Acquisitions Officer2011J. Scott Penny has been the Chief Acquisitions Officer since 2011. He joined the company in 1989 and has held various roles, including regional president and regional executive vice president .
    Chris L. WalkerExecutive Vice President; President - National Programs Segment2014Chris L. Walker was appointed as President of the National Programs segment in 2014. He joined the organization in 2003 and has been involved in business development strategies and product expansion .
    R. Andrew WattsExecutive Vice President, Chief Financial Officer and TreasurerMarch 4, 2014R. Andrew Watts joined as Executive Vice President and Treasurer in February 2014 and became the Chief Financial Officer effective March 4, 2014. He previously worked at Thomson Reuters and PricewaterhouseCoopers .
    Stephen P. HearnDirectorAugust 9, 2024Stephen P. Hearn was appointed as a director on August 9, 2024. He has held various leadership roles in the insurance industry, including positions with The Ardonagh Group and BGC Partners, Inc. .

    Questions to Ask Management

    1. Given that your guidance for 50 to 100 basis points of adjusted EBITDAC margin improvement is highly dependent on storm activity, can you elaborate on the specific factors that could cause you to fall at the lower end of this range and how you plan to mitigate the potential impact of a severe storm season?

    2. Considering the continued pressure on casualty pricing and the challenges in obtaining significant umbrella limits from single carriers, especially for tougher classes like habitational, liquor-heavy establishments, and residential construction, how are you adapting your strategies to manage these risks and maintain profitability in these segments?

    3. As you expand your capabilities to serve larger accounts, such as 5,000 to 10,000 life groups in employee benefits, what are the main obstacles you face against larger competitors, and how are you ensuring that your investment in these capabilities leads to sustainable market share gains?

    4. With some property accounts beginning to move from the E&S market back to the standard market when conditions allow, how significant is this trend for your business, and what measures are you taking to retain clients who might be considering a switch back to admitted markets?

    5. Given that your investment income was positively impacted by higher cash balances due to holding $500 million for upcoming debt repayment, how do you expect your investment income to trend post-repayment, and what steps are you taking to optimize returns in a changing interest rate environment?

    Share Repurchase Program

    Program DetailsProgram 1Program 2Program 3
    Approval DateJuly 18, 2014 July 20, 2015 May 1, 2019
    End Date/DurationN/AN/AN/A
    Total Additional Amount$200.0 million $400.0 million $372.5 million
    Remaining AuthorizationN/AN/A$249.5 million
    DetailsN/AN/AN/A

    Debt Maturity Schedule

    YearAmount Due (in millions)Debt TypeInterest Rate% of Total Debt
    2024$6 Current portion of long-term debtN/A0.2% = (6 / 3,592) * 100
    2025$150 3-year term loan facilitySOFR + up to 1.625% 4.2% = (150 / 3,592) * 100
    2026$175 5-year term loan facilitySOFR + up to 1.750% 4.9% = (175 / 3,592) * 100
    2027$375 5-year term loan facilitySOFR + up to 1.750% 10.4% = (375 / 3,592) * 100
    2029$350 4.500% senior notes4.500% 9.7% = (350 / 3,592) * 100
    2031$700 2.375% senior notes2.375% 19.5% = (700 / 3,592) * 100
    2032$598 4.200% senior notes4.200% 16.6% = (598 / 3,592) * 100
    2034$599 5.650% senior notes5.650% 16.7% = (599 / 3,592) * 100
    2052$592 4.950% senior notes4.950% 16.5% = (592 / 3,592) * 100

    Auditor

    NameStart DateEnd DateReason for Change
    Deloitte & Touche LLP2002 PresentCurrent auditor

    Latest news

    Recent developments and announcements about BRO.

    Financial Reporting

      Earnings Call

      ·
      8 days ago

      Summary of BRO's Fourth Quarter Earnings Call

      Key Financial Highlights:

      • Revenue Performance: BRO reported fourth-quarter revenues of $1.4 billion, a 15% increase year-over-year, with organic growth of 14%.
      • Profitability: Adjusted EBITDAC margin improved by nearly 200 basis points to 33%, and adjusted earnings per share grew 24.5% to $0.86.
      • Full-Year Results: For 2024, BRO achieved $4.8 billion in revenues, growing 13% overall and over 10% organically. Adjusted EBITDAC margin increased by more than 100 basis points to 35.2%, and diluted net income per share rose 18.2% to $3.84.
      • Cash Flow: Generated $1.174 billion in cash flow from operations, a 16.2% increase over the prior year.

      Management’s Forward Guidance:

      • 2025 Outlook: Management anticipates relatively flat adjusted EBITDAC margins for 2025, with contingents expected to decline slightly due to uncertainties like California wildfires and the Atlantic hurricane season.
      • Retail Division: Organic revenue growth in Q1 2025 is expected to be approximately 100 basis points lower than the other quarters due to timing of net new business.
      • Interest Rates: Interest expense is projected to range between $170 million and $180 million, while interest income is expected to be $65 million to $70 million.

      Market Conditions and Strategic Initiatives:

      • Insurance Pricing Trends: Rates for most lines continued to increase but at a moderating pace. CAT property rates decreased by 10%-20% in Q4, while auto and casualty rates saw upward pressure.
      • Employee Benefits: Strong demand persists due to rising medical and pharmacy costs (up 7%-9%).
      • M&A Activity: BRO completed 10 acquisitions in Q4, adding $137 million in annual revenue. The largest acquisition was Quintes in the Netherlands, which positions BRO for growth in the Dutch market.

      Analyst Questions and Management Responses:

      • Forward Guidance on Retail: Management reiterated that Retail is a low- to mid-single-digit organic growth business. They expect a 100 bps headwind in Q1 2025 but remain optimistic about full-year performance.
      • Programs Segment: Organic growth in Programs was 38.6% in Q4, driven by strong new business and exposure unit expansion. However, management noted moderating growth rates and potential downward pressure on contingents in 2025.
      • California Wildfires: Management expressed concerns about the availability of contractors for rebuilding efforts and the potential impact on insurance claims and contingents.
      • Customer Behavior in Property Insurance: Despite decelerating property pricing, customer shopping remains high due to years of upward pressure on premiums.

      Strategic Investments:

      • BRO continues to invest in hiring across all roles, including service, marketing, and claims adjusting, to support organic growth.
      • The company remains financially conservative, paying down debt to position itself for potential large-scale acquisitions.

      Closing Remarks:

      Management expressed confidence in BRO’s performance and growth opportunities for 2025, emphasizing the company’s diversified business model and strong operating culture.

      Earnings Report

      ·
      Jan 27, 2025, 10:36 PM

      Brown & Brown, Inc. (NYSE: BRO) has released its fourth quarter and full-year 2024 earnings results as of January 27, 2025. Below are the key highlights:

      Fourth Quarter 2024 Highlights

      • Total Revenues: $1.2 billion, a 15.4% increase compared to Q4 2023.
      • Organic Revenue Growth: 13.8%.
      • Diluted Net Income Per Share: $0.73, a 22.3% decrease compared to Q4 2023.
      • Diluted Net Income Per Share - Adjusted: $0.86, a 24.6% increase compared to Q4 2023.
      • EBITDAC - Adjusted: $390 million, a 22.6% increase compared to Q4 2023.
      • EBITDAC Margin - Adjusted: 32.9%, up from 31.0% in Q4 2023.

      Full-Year 2024 Highlights

      • Total Revenues: $4.8 billion, a 12.9% increase compared to 2023.
      • Organic Revenue Growth: 10.4%.
      • Diluted Net Income Per Share: $3.46, a 13.4% increase compared to 2023.
      • Diluted Net Income Per Share - Adjusted: $3.84, an 18.2% increase compared to 2023.
      • EBITDAC - Adjusted: $1.7 billion, a 17.0% increase compared to 2023.
      • EBITDAC Margin - Adjusted: 35.2%, up from 33.9% in 2023.

      Key Trends and Insights

      • The company achieved strong Organic Revenue growth of 10.4% for the full year, driven by increased commissions and fees.
      • The decline in Income Before Income Taxes Margin for Q4 2024 (23.2% vs. 34.7% in Q4 2023) was attributed to a one-time gain on the disposal of certain businesses in Q4 2023.
      • Net income for Q4 2024 decreased by 21.9% year-over-year, but adjusted earnings per share showed significant growth, reflecting the company's operational improvements.

      CEO Statement

      J. Powell Brown, President and CEO, stated: “The fourth quarter was outstanding. We are extremely pleased with our 10.4% Organic Revenue growth for 2024. These results were only possible through the incredible efforts of our 17,000+ teammates.”

      Upcoming Events

      • A conference call to discuss the results will be held on Tuesday, January 28, 2025, at 8:00 AM (EST). The webcast and slides will be available on the company's website.

      For more details, visit the Investor Relations section of Brown & Brown's website.

    Corporate Leadership

      Board Change

      ·
      Jan 22, 2025, 10:31 PM

      Chilton D. Varner, a member of the board of directors at Brown & Brown, Inc. (BRO), has announced that she will not stand for re-election at the company's 2025 Annual Meeting of Shareholders. This decision, communicated on January 21, 2025, is not due to any disagreement with the company.

      Leadership Change

      ·
      Jan 22, 2025, 10:30 PM

      Chilton D. Varner is leaving Brown & Brown, Inc. She will not stand for re-election at the Company's 2025 Annual Meeting of Shareholders. Her decision is not due to any disagreement with the Company on its operations, policies, or procedures.