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Brown & Brown, Inc.
CEO : Mr. J. Powell Brown C.P.C.U., CPCU

Quarterly earnings growth(YoY,%)

Andy Watts says,

Impact of Declines in Personal Lines

• The company has been facing declines in personal lines for a while, starting with the fires on the west coast about 18 months ago.
• This decline has affected numbers and has been observed in California, Florida, Louisiana, and northern Texas.

Increased Uptick in Wholesale Business

• The wholesale business has seen the biggest impact in terms of percentage-wise changes.
• The shift of properties from the past into state-sponsored plans and the withdrawal of admitted carriers in certain markets has led to an increase in submissions and business in the wholesale space.
• This uptick in the wholesale business is a positive development for the company.

Uncertainty in Wholesale Business

• It is uncertain how long the uptick in the wholesale business will continue, as carrier appetites and portfolio adjustments can lead to changes.

Powell Brown says,

Impact of headwinds on Dealer Services business

• The company had anticipated headwinds for dealer services in the first quarter.
• These headwinds were in the range of about 50 to 100 basis points.
• In the third and fourth quarters of the previous year, the company saw headwinds in the dealer services business, which had an impact of about 1%.

Expectations for the second half of the year

• In the second half of the year, the company does not anticipate the same level of headwinds for the Dealer Services business.
• Despite the current cycle, the company is proud of the performance of the Dealer Services business and has made significant investments in its capabilities.

Q & A sessions,

Impact of Market Conditions on Capacity and Growth

• Insurers are facing limited time and close expiration dates for renewals and new business, resulting in increased activity in analyzing limits and quotations.
• Buyers have fatigue from continuous property insurance increases, leading to uncertainty about how much more they can afford.
• Growth is expected to be driven more by new business rather than increased growth on renewal building.
• The market’s capacity and growth are dependent on external factors such as weather, specifically the occurrence of hurricanes.

Performance of Retail and National Programs

• Retail revenues have increased by approximately $5 million year-over-year, primarily due to acquisition activity.
• Contingents in the retail sector are expected to decrease significantly in the latter part of the year.
• In National Programs, a $5 million increase in contingents in the second quarter is partly due to adjustments from the previous year and higher estimated commissions.
• Further increases in contingents in the third and fourth quarters are not anticipated.

Impact of Loss Experience and Reinsurance Cost on the Property Market

• Insurers who have experienced losses in CAT prone areas, including Florida, need time and distance to recover financially.
• The property market has become less competitive due to loss experience and increased reinsurance costs.
• The stabilization of rates or even slight decreases may be expected if there are no major storm events.

Importance of Diversification in Managing Headwinds

• Diversification is seen as a powerful strategy to balance out potential headwinds in specific regions.
• The acquisition of Working, which focuses on high-net-worth personal lines in the Southeast and Eastern Seaboard, is contributing to overall growth.

Performance of Captives and Organic Growth

• Captives have experienced a good quarter, with minimal organic impact expected in the fourth quarter.
• Approximately $6.5 million of organic benefit was achieved in the current quarter.
• The upper range of previous guidance for captives’ growth is expected to be reached.
• In the third quarter, organic growth may face a $5 million to $7 million headwind due to the acceleration of premium recognition and claim costs in the previous year.