Brown & Brown Inc. reported second-quarter revenue of $839.7 million late Monday, up 15.5% from the same period last year, with organic sales up 10.3%.
Quarterly profit rose 4.2% to $145.2 million.
Revenue growth was driven by new business, good retention rates, rate hikes and expansion of exposure units, J. Powell Brown, chairman, president and CEO of the Daytona Beach, Fla.-based brokerage, said on an earnings call with analysts on Tuesday.
Although economic growth will continue to moderate to more normal levels, Brown & Brown is well positioned to navigate any potential headwinds and has plenty of momentum for continued profitable growth, Brown said.
“We have a significantly more diversified business today than we did a decade ago, which should make us more resilient to a downturn in the economy,”; he said.
Organic revenue, which excludes acquisitions and various other changes, increased 8.8% in Brown & Brown’s retail segment, 19% in national programs and 7% in wholesale. It was down 0.5% in services due to higher claims activity in the prior year related to travel cancellations and weather events.
Brown & Brown completed eight acquisitions in the second quarter, with total annual sales of $11 million. This included the addition of London-based brokerage Global Risk Partners Ltd. in a deal completed on July 1 that added more than 2,000 employees.
Most businesses continued to expand somewhat in the second quarter, even with GDP moderating to more traditional levels, Brown said.
While companies remain cautious in the face of inflation, labor shortages and rising interest rates, many are having the “best years they’ve ever had,” with construction clients reporting their pipeline business is “off the charts,” analysts said.
For many renewals, the stated premium increase is growing at a faster rate than the company’s revenue, Brown said. Customers continue to change deductibles and limits to best manage premium increases, he said.
Allowable market rates rose by 4% to 8% across most lines in the second quarter. The outlier was workers’ compensation, as prices continued to fall, but at a slower pace.
Surplus and excess line prices increased by 10% to 20%, cat wind property prices increased by 15% to 35% and earthquake prices increased by 7% to 10%.
Insurers continued to focus on insurable values as claims costs have increased substantially in recent years, Brown said.
The impact of higher values combined with losses will most likely keep property rate increases in a similar range through the end of the year, he said.
Professional liability and excess liability placements continue to be challenging for most accounts, with rates up 5% to 15% during the quarter.
Cyber premiums and deductibles continue to rise with insurers demanding effective protocols, Mr. Brown.
Through the end of the year, allowable market rates are expected to remain constant and rates for excess and excess lines should be fairly similar, depending on the hurricane season, he said.
Additional tax increases for commercial and personal property lines are possible in the California, Florida and Louisiana markets, he said.
For the first half of 2022, revenue rose 13.1% to $1.74 billion, up 9% on an organic basis. First-half net income increased 7.8% to $365.5 million.