Brown & Brown, Inc. Q4 FY2025 earnings call

• Opened with condolences on the passing of Chief Legal Officer Rob Mathis. - Fourth quarter revenues were $1.6 billion, up 35.7% year-over-year. Full-year revenues were $5.9 billion, up 23% year-over-year. Adjusted EBITDAC margin was 35.9%, up 70 basis points. Cash flow from operations was $1.450 billion, up 23.5% year-over-year. - Acquisition of Accession: Fourth quarter revenue was approximately $405 million (below guidance of $430M-$450M), impacting margins by ~200 basis points. - Market commentary: Economic growth relatively stable; insurance pricing mixed with casualty rates increasing, E&S property rates down, and customers focusing on managing insurance spend. - M&A activity: Completed 6 acquisitions in Q4 with estimated annual revenue of $29M; full-year added ~$1.8B annual revenue from 43 acquisitions, including the largest acquisition in history (Accession).

Retail segment: Fourth quarter organic growth was 1.1%. Full-year organic revenue growth was 2.8%. Specialty Distribution segment: Fourth quarter organic revenue decreased by 7.8% due to flood claims processing revenue and greater-than-expected CAT property rate declines. Full-year organic growth was 2.8%.

• Accession: Seasonality of revenues and profit, with second half more weighted to third quarter; Q1 margin impact from Accession. - Synergies: Anticipate EBITDA synergies of $30M-$40M in 2026. - Contingents: Specialty Distribution contingents expected down ~$15M in 2026 due to onetime adjustments and storm claim activity. - Organic growth: Retail expected modest improvement in 2026; Specialty Distribution expected improved organic growth. - Margins: Long-term adjusted EBITDAC margin target raised to 32%-37%; effective tax rate expected 24%-25% in 2026.

• Teammate departures: Loss of 275 teammates with $23M in revenue, legal defenses in place with nonpiracy/nonsolicitation agreements, but future impact on business uncertain. - Market volatility: Insurance pricing fluctuations, competitive pressures, and potential impact of talent wars on margins.

Q: Comments on the 275 former teammates that left with $23M of revenue.

A: Discussed retention strategy using mix of cash compensation and equity-based performance, and legal defenses with nonpiracy/nonsolicitation agreements.

Q: Shift of business from E&S to standard.

A: Mentioned tweeners and potential movement, but E&S still expected to have more insured assets moving in.

Q: Casualty pricing deceleration.

A: Slight moderation in primary casualty rates, excess still increasing.

Q: Impact of lost producers on revenue and margins.

A: $23M is current, future impact speculative, but rehiring teammates ongoing.

Q: Organic growth expectations.

A: Retail expected modest improvement; Specialty Distribution expected faster growth than Retail.