Best Insurance Brokers, #6: Brown & Brown Inc.

Brokerage revenue 2021: $3.05 billion
Percentage increase: 16.9%

Brown & Brown Inc. delivered strong organic revenue growth in 2021 and continues to grow through acquisitions, including two significant transactions this year that mark further expansion of its international footprint.

The Daytona Beach, Fla.-based brokerage firm’s 10.4% organic growth was fueled in part by rising property and casualty insurance rates, said J. Powell Brown, president and chief executive officer. “And we’ve been very pleased with the number of new business we’ve written and the retention of our existing customers,” he said.

Brown & Brown’s organic revenue growth has been well above the average for its peers, said C. Gregory Peters, managing director of equity research at Raymond James & Associates Inc. in St. Petersburg, Fla. “Pieces of the puzzle that are important to the future of the business, including positioning for organic revenue growth” and opportunistic acquisitions, “appear to be in place for them to continue to do well this year,” did he declare.

Brown & Brown reported brokerage revenue of $3.05 billion in 2021, an increase of 16.9% over the prior year. The company has maintained its position as No. 6 in Business insurance’s ranking of the largest brokerages in the world.

Brown & Brown posted revenue of $904.7 million for the first quarter of this year, up 11% year-over-year. Organic growth of 7.8% is lower than the 9.8% for the same quarter in 2021.

Like other brokerages, Brown & Brown benefited from the rising tide of an improving economy as the COVID-19 crisis waned, said Paul Newsome, chief executive of Piper Sandler & Co. in Minneapolis. “We have seen a rebound in organic growth in part thanks to the recovery from the pandemic. Overall, the environment has been quite good for insurance brokers.

Brown & Brown completed 19 acquisitions in 2021 with combined annual revenue of approximately $132 million. Fifteen of the deals were added to Brown & Brown’s retail segment, three to its wholesale brokerage segment and one to national programs.

The acquisition of O’Leary Insurances Ltd. in Cork, Ireland was finalized in January 2021, the second international deal for Brown & Brown. Its first, completed in 2020, was the acquisition of Special Risk Insurance Managers, an MGA based in Langley, British Columbia. Since then, the brokerage has expanded its international presence.

In the first quarter of this year, Brown & Brown agreed to acquire the operating companies of London wholesaler BDB Ltd. and London brokerage Global Risk Partners Ltd.

“It’s important for them as part of the natural evolution to become a global platform,” Peters said of Brown & Brown’s international moves. “It’s methodical, deliberate and consistent with how they approach the business.”

Brown & Brown is among other US brokers that have made inroads into the UK and Ireland in recent years, Mr Newsome said. “Selling insurance in English-speaking countries with stable regulations and governments” is easier than striking deals in areas where those conditions may not exist, he said.

Brown & Brown has been operating in London since 2008 when it opened a business there, Mr Brown said.

The brokerage also agreed in the first quarter of this year to acquire managing general agent Orchid Underwriters Agency, based in Vero Beach, Fla., and its subsidiary CrossCover Insurance Services. With the BDB and Global Risk Partners deals, the brokerage firm agreed to spend about $2.5 billion on the three acquisitions, funding the deals with about $2 billion in newly issued debt and available cash.

Meanwhile, the 2020 acquisition of CoverHound Inc., a San Francisco-based online insurance platform, has helped Brown & Brown expand into the digital insurance space, which is an area in which the brokerage would like to expand further, Mr. Brown said.

“We are very satisfied with CoverHound; it helped us get into an area of ​​the market that we weren’t in from a numerical perspective,” Brown said.

The brokerage is exploring how the platform could potentially be used in its domestic programs and wholesale business segments, he said.

“We would consider something in the same space,” he said of future digital deals, “if it was on top of what we already have. We’re not trying to buy something that doubles employment in this space.