Brown & Brown Inc. reported higher revenue for the second quarter, but the COVID-19 pandemic could affect the overall economy until 2022, its top executive said Tuesday.
President and CEO J. Powell Brown, who recently contracted and recovered from the disease, said the performance of the insurance sector will be strongly affected by external factors such as pandemics and civil unrest.
The broker expects its full-year organic revenue to be slightly up or down, he said.
19659002] Brown & Brown reported on Monday the second quarter revenue of $ 598.8 million, an increase of 4.1% over the same period last year.
Overall, organic income, excluding mergers and acquisitions and supplementary commissions, increased 0.5% to $ 547.8%, but growth varied by sector.
In a conference call with analysts on Tuesday, Mr. Brown that the broker's retail segment reported organic revenue of $ 290 million in the second quarter, a decrease of 2.6% compared to sam in the same period last year, partly due to lower general liability revenue due to economic disruption during the pandemic.
Brown & Brown's national program segment reported a 1
Organic revenue from wholesale increased slightly to $ 79.2 million, and revenue from the service segment, which includes claims handling, decreased 15.4% to $ 42.9 million.  "Based on the continued uncertainty in the recovery, we believe that our year-round organic growth may be somewhat positive to somewhat negative," Brown said.
Much will depend on how and when the overall economy recovers from the effects of the pandemic, he said.
"We believe it will be slow and sporadic, and we may not recover to pre-pandemic levels until 2022," he said.
Uncertainty about employment and consumer spending will continue to increase, the solvency of brokerage clients, the effect of interest rate hikes on insurance purchases, the economic effects of civil unrest in different cities, the ability to meet prospective clients and how much further federal stimulus will provided will all affect the speed of recovery, said Mr. Brown.
The virus has also affected Mr. Brown personally.
“I contracted COVID-19 a number of weeks ago. While I felt a little sluggish at times, that did not stop me from making phone calls and engaging with people in general. I'm fine now and have had my negative test results yesterday, "he said.
Brown & Brown's net profit for the second quarter increased 4.5% to $ 96.8 million.
Hospitality, restaurant and entertainment operations declined significantly during the second quarter, resulting in reduced insured exposures for companies in these industries, said Mr. Brown.
But industries such as healthcare and construction were "resilient and in some cases continue to expand," he said.
Reductions in wages reduced workers' compensation income, but income from employees increased as a result of new business and because of hard-hit employers who chose to hire employees rather than lay them off, he said.
Interest rate hikes in many lines accelerated during the second quarter Brown said.
Premium rates in the allowable market increased by 2% to 7%, excluding commercial vehicles, which continued to increase by 5% to more than 10%, he said. In the market for surplus and surplus lines, property insurance levels for coastal properties increased by 15% to 25%, general property prices increased by 5% to 10%, professional liability levels increased by 10% to 20% and cyber liability levels increased by 10% to 20%.
Interest rate hikes are likely to remain fairly consistent for the rest of the year, Mr said. Brown.
Workers' interest rates continued to decline but at a slower pace, down 1% to 5%.
The broker, which has a long history of growth through mergers and acquisitions, completed three acquisitions during the quarter with a total annual revenue of $ 46 million.
The biggest challenge in the brokerage M & A field is how to project the economic impact of the pandemic on the target companies, said Mr. Brown.
"With this uncertainty, the proportion of money paid at closing may decrease slightly, but it does not appear that values will change significantly at this time," he said.
Brown & Brown expects to make more acquisitions this year and has a full pipeline of potential deals, said Mr. Brown.
More insurance and risk management news about the coronavirus crisis here . Catalog