Brown & Brown Inc. reported that its first-quarter revenue rose 23.4% to $1.116 billion, driven in part by continued interest rate hikes.
Organic growth was 12.6%, as commissions and fees rose 22.5% to $1.108 billion, the Daytona Beach, Fla.-based brokerage said in its earnings statement released Monday after markets closed.
Net income rose 6.9% to $235.5 million, as wages and employee benefits rose 24.4 percent to $571.1 million.
The retail segment posted 8.8% organic growth, as organic revenue rose to $618.2 million, Brown & Brown President and CEO J. Powell Brown said Tuesday on an earnings call with analysts. Organic revenue figures exclude the effect of currency fluctuations and acquisitions.
The National Programs segment had organic revenue growth of 33.8% to $200.5 million, while organic growth in the Wholesale Brokerage segment was 7.0% to $104.3 million.
Segment growth was driven by new business, strong retention and continued interest rate increases, Brown said on the call.
“The insurance market was very challenging for clients in the first quarter across most industries,” Brown said. Rate increases were similar to previous quarters, with busy markets up 5% to 7% and the surplus and surplus market up 10% to 20%, he said.
There were some exceptions to the trend, such as workers’ compensation, which continued to decline.
In many cases, customers are purchasing increased deductibles and reduced total limits, Brown said.
The areas that remain most challenging are excess and excess property and excess liability, due to losses and increases in insured values, Mr. Brown. “Carriers continue to evaluate their coastal property portfolios,” he said.
The brokerage completed seven acquisitions in the first quarter, with an estimated combined annual revenue of $11 million, according to Mr. Brown. He said the pace of M&A deals, particularly those involving financial backers, had slowed.
The macroeconomic environment continues to pressure businesses, Brown said.
“Overall, business leaders are generally cautious about the future while dealing with the effects of inflation and higher interest rates,” he said. “There has been no material change in what we heard from our customers in the fourth quarter of 2022.”