2023 brokerage revenue: $4.2B
Percent increase: 17.9%
Brown & Brown Inc.’s strong organic growth and many acquisitions, including several in the United Kingdom, combined to produce solid revenue gains in 2023.
The brokerage’s organic growth reached 10.2% last year and gross revenue grew 19.1%, said J. Powell Brown, president and CEO. “It’s a pretty healthy mix,” he said.
That trend is continuing, Mr. Brown said. “We believe there will be a lot of consolidation in the insurance brokerage, underwriting and wholesale spaces. We are actively participating in all three areas,” he said.
In this year’s first quarter, revenue was up 12.7% to $1.26 billion, and organic growth reached 8.6%.
Brown & Brown’s 2023 performance was outstanding, said C. Gregory Peters, managing director-equity research at Raymond James & Associates Inc. in St. Petersburg, Florida. “Another success story,” he said of last year’s growth.
Brown & Brown has benefited from high insurance prices in property and other lines, Mr. Peters said. In addition, the brokerage’s national programs and wholesale operations have grown steadily over the past year. “That’s lifting not only their top line but their margins, too,” Mr. Peters said.
Brown & Brown’s 2023 brokerage revenue of $4.2 billion, an increase of 17.9% from the prior year, moved the company up one spot to No. 6 in Business Insurance’s ranking of the world’s largest brokerages.
The 2023 performance marked a milestone for the company. “Last year, we crossed our intermediate goal of $4 billion in revenue,” Mr. Brown said. “Our new goal is $8 billion,” he added, declining to predict how long that might take to reach.
“Brown & Brown has done well, consistently, quarter after quarter,” said Meyer Shields, Baltimore-based managing director at Keefe, Bruyette & Woods Inc.
The brokerage has benefited partly from the hard-market trend of coverage moving to the excess and surplus lines market as admitted-market insurers focus more heavily on profitability than growing premium volume, Mr. Shields said. That helps brokers with large wholesale operations, he added.
Brown & Brown completed 33 acquisitions last year, with annualized revenue of $162 million. That compared with 30 deals in 2022, with combined annualized revenue of $435 million. One of those 2022 purchases, Global Risk Partners Ltd., represented $340 million of the total for the year.
Five acquisitions were completed during this year’s first quarter.
Expansion in the United Kingdom continues for Brown & Brown, with acquisitions in 2023 that included Belfast, Northern Ireland-based claims management company Davison & Associates Ltd. and its affiliate insurance consultancy Davison Lamont Ltd. Among its deals in England, the brokerage acquired London-based managing general agent Occam Underwriting Ltd. and Leicester-based Berkeley Insurance Group (UK) Ltd., a brokerage whose specialties include commercial property, cyber and financial risks.
“We are extremely pleased with the teammates that have joined us in those two geographies,” Mr. Brown said.
Brown & Brown does not have an extensive operation in continental Europe, he said, but would consider acquisitions there if they were a “cultural fit.”
“That’s the next chapter for the company because they’ve got such a successful footprint in North America and making a logical leap overseas into the European and U.K. market makes a lot of sense,” Mr. Peters said.
Brown & Brown has “small operations” in Hong Kong, Singapore and Dubai, Mr. Brown said. Earlier this year, the brokerage agreed to buy Singapore-based Acorn International Network Pte Ltd.
“They’re very profit-oriented,” Mr. Peters said of Brown & Brown. “If they are contemplating entering a new market … one of their principal parameters has to be the growth opportunities and margin opportunities.”
In 2023, Brown & Brown’s adjusted earnings before interest, taxes, depreciation and amortization margin was the highest among publicly traded brokerages in the U.S., Mr. Peters said. The metric, a measure of operating profit as a percentage of revenue, is a marker that allows the comparison of a company’s performance against its peers.
Brown & Brown’s high EBITDA margin indicates that the brokerage is “doing an excellent job” of converting high levels of revenue into free cash flow, Mr. Peters said.
