Brown & Brown Inc. reported fourth-quarter revenue of $901.4 million, up 22.1% from the same period in 2021, with organic revenue up 7.8%.
Fourth-quarter net income rose 42.8% to $145.2 million, and commissions and fees rose 21.3%, the Daytona Beach, Fla.-based brokerage reported late Monday.
The brokerage also continued to grow through acquisitions. It completed nine deals in the fourth quarter, bringing combined annualized sales of $17 million.
Disaster property prices are expected to rise 10% to 40% for at least the first half of this year and capacity is limited as the market fully digests the effects of Hurricane Ian and other losses, Brown & Brown President and CEO J. Powell Brown said during the brokerage̵7;s earnings call Tuesday morning.
Brown & Brown is seeing downward pressure on commissions on some placements, with commissions down a point or two, Brown said in response to questions from analysts.
Placements of distressed property in January and in the fourth quarter of last year were “some of the most difficult placements we’ve seen in decades, with prices increasing 20% to 40% or more,” Mr. Brown.
For properties of poorer construction quality or that have experienced losses, the rate hikes could be much higher, “and I mean much higher than this range,” Brown said.
As a result, some customers couldn’t afford a full limit and ended up increasing their deductibles or buying smaller limits to manage their insurance costs, he said.
Recognized market rate hikes were up 3% to 7%, similar to previous quarters, with workers’ compensation outpacing rates by 1% to 3%.
Professional liability and excess liability remain competitive, with rates ranging from down 5% to up 5%. The level of liability for directors and officers of public companies has been reduced by 5% to 20% or more.
Cyber premiums and deductibles continue to rise, although there were “some small moderations during the quarter,” Brown said.
Brown & Brown’s retail segment had organic growth of 2.7% in the fourth quarter; national programs 21.9%; wholesale 8.1%; and services 0.2%.
In retail, solid new business across most lines was tempered by a decline in specialty, the brokerage said.
The economic outlook remains uncertain, but the brokerage continues to see the expansion of many companies still hiring, albeit at a slower pace than previous quarters, Brown said.
“While interest rates have risen substantially over the past year, we don’t see a broad impact on our customers or the economy yet,” he said.
For the full year, Brown & Brown reported record revenue of $3.573 billion, up 17.1% from 2021, with commissions and fees up 16.9%. The organic growth for 2022 was 8.1%.
Net income for the year was $671.8 million, an increase of 14.4%.
The retail segment had full-year organic growth of 6.5%, national programs 15.7% and wholesale brokerage 7.6%. The services segment decreased by 2.9% on an organic basis.
Brown & Brown completed 30 acquisitions in 2022, representing combined annual revenue of $435 million.
The broker had a record year for acquisitions and expanded its footprint and capacity in the UK market, Brown said. The acquired London-based brokerage Global Risk Partners Ltd. and Lloyd’s of London wholesale broker BDB Ltd. last year.
From an overall industry acquisition perspective, the number of transactions decreased significantly in the fourth quarter compared to previous quarters, but if a company is considered a must, the market is “still aggressive on pricing,” Brown said.