Brown & Brown Inc.

Company Overview

Business Model: Brown & Brown, Inc. is a diversified insurance agency, wholesale brokerage, insurance programs, and service organization. The Company primarily operates as an agent or broker, generating revenue through commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers. Brown & Brown also operates and/or participates in various ancillary insurance operations, including reinsurance companies, stand-alone captives, series captive insurance companies, protected cell companies, segregated account companies, a quota share captive, and an excess of loss layer captive (collectively, the "Captives"). These Captives facilitate additional underwriting capacity, generate incremental revenues, and enable participation in certain underwriting results. Additionally, the Company operates Wright National Flood Insurance Company, a write-your-own flood insurance carrier, whose underwriting business consists of policies written pursuant to the National Flood Insurance Program and excess flood policies fully reinsured in the private market.

Market Position: The insurance intermediary business is highly competitive, with competition largely based on innovation, knowledge, understanding of coverage terms, quality of service, and price. Brown & Brown emphasizes a customer-first, high-performing, decentralized organization focused on growth and service, empowering and rewarding its teammates. The Company faces competition from numerous firms, some with substantially greater resources, as well as direct sales by insurance companies and emerging internet and startup technology companies. Brown & Brown has its own technology capabilities to serve personal lines and small businesses.

Recent Strategic Developments: In the third quarter of 2025, Brown & Brown completed the acquisition of RSC Topco, Inc., the holding company for Accession Risk Management Group, Inc., a North American insurance distribution platform. This acquisition, valued at $9,608 million (comprising $8,293 million in cash and $613 million in common stock), led to a realignment of Brown & Brown's business from three to two reportable segments: Retail and Specialty Distribution. In 2025, the Company completed a total of 43 acquisitions, including book purchases, with a net cash outlay of $7,854 million, most notably for Accession and Poulton Associates, LLC ($168 million).

Geographic Footprint: As of December 31, 2025, Brown & Brown conducted activities in 468 domestic locations across 47 states and 246 international locations. International operations are present in Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Hong Kong Special Administrative Region of the People's Republic of China, India, Italy, Malaysia, the Netherlands, Republic of Ireland, Singapore, United Arab Emirates, and the United Kingdom. For the year ended December 31, 2025, 85.7% of total revenues were derived from the U.S., 10.2% from the U.K., and 4.1% from other international regions.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: 23.2% (2025) vs. 27.1% (2024)
• Net Margin: 17.9% (2025) vs. 20.7% (2024)

Investment in Growth:

• Capital Expenditures: $68 million (2025)
• Strategic Investments: $7,854 million (net of cash acquired) for 43 acquisitions in 2025, including RSC Topco, Inc. ($7,463 million) and Poulton Associates, LLC ($168 million).

Business Segment Analysis

Retail Segment

Financial Performance:

• Revenue: $3,406 million (+24.8% YoY)
• Operating Margin (EBITDAC Margin - Adjusted): 30.0% (2025) vs. 30.0% (2024)
• Key Growth Drivers: Organic Revenue growth of 2.8%, driven by net new business and growth on renewals of existing customers. The segment also benefited significantly from $559 million in core commissions and fees from acquisitions. Growth was partially offset by the timing of certain nonrecurring revenue items, slowing rate increases, rate decreases for certain lines of coverage, certain adjustments to incentive commissions, and a regulatory change for one of the Company's U.K. businesses.

Product Portfolio:

• Major product lines and services include Property & Casualty (Property, Casualty, Workers' Compensation, Surety, Aviation, Private Equity/Mergers & Acquisitions, Executive Liability, Cyber Risk, Multinational), Employee Benefits (Group Health, Voluntary Benefits, Pharmacy Benefits, Independent Retirement, International Benefits, Employer Stop Loss, Long-Term Care), Personal Insurance (Homeowners, Automobile, Personal Excess Liability, Flood and Excess Liability, Flood and Excess Flood, Specialized Coverages, Group Excess), and Specialties (Dealer Services, Specialty Risk Solutions, Tribal Nations, Total Rewards & Compensation).

Market Dynamics:

• The Retail segment serves commercial, public and quasi-public entities, and professional and individual customers. No material part of the segment is attributable to a single customer, with the largest single customer representing 0.6% of the segment’s total commissions and fees in 2025.

Specialty Distribution Segment

Financial Performance:

• Revenue: $2,409 million (+19.5% YoY)
• Operating Margin (EBITDAC Margin - Adjusted): 43.1% (2025) vs. 42.8% (2024)
• Key Growth Drivers: Organic Revenue growth of 2.8%, driven by net new and retained business and exposure unit expansion. Acquisitions contributed approximately $277 million in core commissions and fees. Profit-sharing contingent commissions increased by 50.0% due to favorable loss ratios, increased premiums, and recent acquisitions. Growth was partially offset by non-recurring flood claims processing revenue in the prior year and declining rates on catastrophic property.

Product Portfolio:

• The segment provides a diverse trading platform for insurance carriers and niche solutions for complex and hard-to-place risks.
• Arrowhead Programs: Manages professional liability, personal lines, commercial lines, public entity, and specialty programs, often for niche, underserved markets. Products include specialty property and casualty insurance, financial lines, life and health benefits, reinsurance, travel/accident and health insurance, captive administrative services, warranty services, and specialty packages of coverages. This division also operates Wright National Flood Insurance Company and participates in a quota share captive and an excess of loss layer captive.
• Bridge Specialty Group: Offers global wholesale brokerage and delegated binding/underwriting capabilities across multiple lines, providing access to admitted, excess, and surplus lines carriers and Lloyd’s markets.
• Arrowhead Specialty: Composed of specialty businesses acquired from One80 Intermediaries (a segment of Accession), offering solutions across affinity and administrative services, captives, reinsurance, travel/accident, warranty, and life & health, including Oxford Risk Management Group.

Market Dynamics:

• The largest Specialty Distribution segment customer represented approximately 7.2% of the segment's total commissions and fees in 2025.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Brown & Brown repurchased 1,255,970 shares for $100 million at an average price of $79.62 per share in 2025. As of December 31, 2025, $1,400 million remained authorized for share repurchases.
• Dividend Payments: The Company paid $193 million in cash dividends in 2025, representing $0.62 per share. A quarterly cash dividend of $0.165 per share was approved on January 21, 2026, payable on February 11, 2026.
• Future Capital Return Commitments: $1,400 million remaining under the share repurchase authorization.

Balance Sheet Position:

• Cash and Equivalents: $1,079 million as of December 31, 2025.
• Total Debt: $7,613 million (net of unamortized discount and debt issuance costs) as of December 31, 2025.
• Net Cash Position: -$6,534 million as of December 31, 2025.
• Credit Rating: The Company's 2034 Senior Notes received investment grade ratings of BBB- stable outlook and Baa3 positive outlook.
• Debt Maturity Profile: Maturities of long-term debt as of December 31, 2025, are $719 million in 2026, $313 million in 2027, $500 million in 2028, $350 million in 2029, $800 million in 2030, and $5,000 million thereafter.

Cash Flow Generation:

• Operating Cash Flow: $1,450 million in 2025, an increase of $276 million from 2024. This growth is primarily due to increased operating margins from organic revenue growth, acquisitions, and improved working capital changes.
• Cash Conversion Metrics: The current ratio was 1.04 as of December 31, 2025, compared to 1.10 as of December 31, 2024.

Operational Excellence

Production & Service Model: Brown & Brown operates as a diversified insurance intermediary, primarily as an agent or broker. The Company fosters a strong, decentralized sales and service culture, which enables responsiveness to changing business conditions and drives accountability for results. Ancillary insurance operations, including Captives and Wright National Flood Insurance Company, provide additional underwriting capacity and enable participation in underwriting results.

Supply Chain Architecture: Key Suppliers & Partners:

• Insurance Carriers: Brown & Brown derives significant commission revenue from a limited number of insurance companies and intermediaries. Arrowhead Programs, for example, is supported by over 100 well-capitalized insurance carriers.
• Third-Party Vendors: The Company relies on a large number of vendors and other third parties for critical business functions such as technology, information security, funds transfers, business process management, and administration.

Facility Network:

• Manufacturing: Not applicable, as the Company is an insurance intermediary.
• Research & Development: Not explicitly detailed as separate facilities, but the Company continuously upgrades and expands its information systems capabilities and explores the use of AI and robotic processing automation.
• Distribution: Brown & Brown owns its executive offices in Daytona Beach, Florida, and an office in Somerton, England. It leases offices at its other 710 locations globally.

Operational Metrics:

• Employee compensation and benefits relative to total revenues: 49.7% (2025)
• Other operating expenses relative to total revenues: 16.2% (2025)

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The Retail segment provides a broad range of insurance products and services directly to commercial, public and quasi-public entities, and to professional and individual customers.
• Channel Partners: The Specialty Distribution segment's programs and wholesale brokerage businesses distribute products and services through a global network of independent agents and brokers, including Brown & Brown retail agents, as well as to affinity groups and wholesale entities.
• Digital Platforms: The Company utilizes its own technology capabilities to serve personal lines and small businesses and is continuously upgrading its information systems for electronic interaction with customers, vendors, and carriers.

Customer Portfolio: Customer Concentration:

• Retail Segment: The largest single customer represented 0.6% of the Retail segment’s total commissions and fees in 2025, indicating a highly diversified customer base.
• Specialty Distribution Segment: The largest customer represented approximately 7.2% of the Specialty Distribution segment's total commissions and fees in 2025.

Geographic Revenue Distribution:

• U.S.: 85.7% of total revenue (2025)
• U.K.: 10.2% of total revenue (2025)
• Other: 4.1% of total revenue (2025)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The insurance intermediary business is highly competitive and subject to the cyclical nature of the insurance market, which can lead to fluctuations in premium rates and commission revenues. The industry is also experiencing disintermediation, with increased competition from insurance companies directly selling insurance, technology companies, and the financial services industry. There is also a shift towards alternative insurance markets such as self-insurance, captives, and capital markets-based solutions.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Brown & Brown competes with numerous firms for customers and insurance markets. Peer group companies mentioned for performance comparison include Aon plc, Arthur J. Gallagher & Co, Marsh & McLennan Companies, and Willis Towers Watson Public Limited Company.

Emerging Competitive Threats: New entrants and technology companies focused on using innovation such as generative AI, digital platforms, data analytics, robotics, and blockchain are seeking to simplify and improve the customer experience, increase efficiencies, and alter business models, potentially bypassing traditional intermediaries.

Competitive Response Strategy: Brown & Brown's strategy includes fostering a strong, decentralized sales and service culture, continuously upgrading and expanding its information systems, and actively exploring and incorporating advanced technologies like AI and RPA to enhance productivity and operational efficiency.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company faces risks from fluctuations in commission revenue due to factors outside its control, such as the cyclical nature of the insurance market and changes in premium rates. Adverse economic conditions, natural disasters, or regulatory changes in key concentrated jurisdictions (Florida, California, Massachusetts, Georgia, Michigan, New York, and the United Kingdom) could materially affect financial performance. Disintermediation within the insurance industry, including increased competition from direct sellers and alternative insurance markets, also poses a risk. Technology Disruption: Rapid technological change, including the advance of generative AI and robotic processing automation (RPA), requires continuous resource commitment. Risks include potential vulnerabilities to cyber threats, inaccuracies or biases in AI/RPA models, and the need to upskill/reskill employees. Customer Concentration: While the Retail segment has low customer concentration, the Specialty Distribution segment's largest customer represents 7.2% of its total commissions and fees. The loss of or significant change to relationships with insurance companies or intermediaries could result in loss of capacity, increased expenses, or loss of market share.

Operational & Execution Risks

Supply Chain Vulnerabilities: Reliance on a large number of vendors and other third parties for key business functions exposes the Company to risks if these parties fail to perform, maintain adequate controls, or protect confidential information. Geographic Concentration: A significant portion of Brown & Brown's business is concentrated in Florida (16% of annual revenue), Michigan (9%), Massachusetts (8%), California (6%), New York (6%), Georgia (5%), and the United Kingdom (10%), increasing exposure to adverse local conditions or regulatory changes. Capacity Constraints: Conditions that result in reduced insurer capacity, such as natural disasters or insurer failures, could make it difficult to place business and adversely affect revenue.

Financial & Regulatory Risks

Market & Financial Risks: The financing of the Accession acquisition significantly increased the Company's indebtedness to $7,613 million, which could reduce business flexibility and increase interest expense. Fluctuations in foreign currency exchange rates, particularly for British pounds, Canadian dollars, and euros, can adversely affect financial performance. A downgrade to the corporate credit rating or debt ratings could increase borrowing costs and reduce financial flexibility. Regulatory & Compliance Risks: Brown & Brown operates in a highly regulated industry, subject to complex and evolving licensing laws and regulations in various states and international jurisdictions. Changes in data privacy and protection laws (e.g., GDPR, CCPA, EU AI Act), potential investigations into business practices and compensation arrangements (e.g., contingent commissions), and increasing scrutiny on ESG practices could lead to increased compliance costs, restrictions on operations, or reputational harm. Proposed tort reform legislation could decrease demand for liability insurance.

Geopolitical & External Risks

Geopolitical Exposure: International operations in the U.K., Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Hong Kong, India, Italy, Malaysia, the Netherlands, Republic of Ireland, Singapore, and United Arab Emirates expose the Company to risks such as political and economic instability, unexpected changes in regulatory requirements, adverse trade policies, and burdens of complying with anti-corruption laws. Trade Relations: Adverse trade policies, trade wars, or tariffs could impact the Company's international operations. Sanctions & Export Controls: Compliance with anti-corruption laws in foreign countries and potential violations by employees or third parties acting on the Company's behalf pose risks.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Brown & Brown focuses on continuously upgrading and expanding its information systems capabilities, including electronic interaction with customers, vendors, and insurance carriers. The Company emphasizes data quality, integrity, and availability as critical to its business strategies. Innovation Pipeline: The Company is actively exploring and incorporating generative artificial intelligence (AI) and robotic processing automation (RPA) into its operations to enhance productivity and operational efficiency. Internal policies and controls govern the development, procurement, deployment, and use of these technologies.

Technology Partnerships: Brown & Brown depends on partners and key vendors to provide technology support for its strategic initiatives.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company's success depends on its ability to attract, retain, and develop skilled personnel, including executive officers and senior management. The Company acknowledges the risk of failing to adequately plan for succession of senior leaders and key executives.

Board Composition: The audit committee of Brown & Brown's board of directors is composed entirely of independent directors.

Human Capital Strategy

Workforce Composition:

• Total Employees: 22,888 individuals worldwide as of December 31, 2025.
• Workforce Growth: The team expanded by nearly 5,794 teammates in 2025 through 43 acquisitions.
• Employee Type: Most of the workforce consists of full-time employees, with part-time and seasonal teammates also employed.

Talent Management: Acquisition & Retention: Brown & Brown prioritizes attracting and developing talented individuals with diverse backgrounds through internal recruiting teams, partnerships with colleges, and a robust internship program. The Company has agreements with sales teams and certain other employees to safeguard confidential information and restrict post-employment solicitation of customers and employees. Employee Value Proposition: Comprehensive benefits include medical, dental, disability, life insurance, and 401(k) plans, refined annually based on feedback. Flexible work arrangements, financial aid through the Disaster Relief Foundation, and a focus on well-being are key components. The Teammate Stock Purchase Plan (TSPP) encourages an ownership culture, with over 60% of U.S. teammates participating.

Diversity & Development:

• Diversity Metrics: The Company monitors the representation of women and racial and ethnic minorities and discusses its gender and minority profile periodically with the board of directors.
• Development Programs: Brown & Brown University (BBU), Education Assistance Program, Women-Led Mentorship Program, and Peer Partnership Program support learning and growth.
• Culture & Engagement: In 2025, 92% of teammates rated Brown & Brown a Great Place to Work®, marking the seventh consecutive year of certification. The Company fosters a meritocracy, customer-first, decentralized culture, supported by 13 Teammate Resource Groups (TRGs) and a "Culture Day" floating holiday.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Commission income, including profit-sharing contingent commissions, incentives, and supplemental commissions, can vary quarterly or annually due to the timing of policy renewals and the net effect of new and lost business production.
• Economic Sensitivity: The Company's business is sensitive to economic conditions. Worsening economic conditions could lead to declines in insurable exposure units, reduced insurance premium rates, financial insolvency of insurance companies, or reduced customer ability to pay.
• Industry Cycles: The insurance market is cyclical. An extended period of low or declining premium rates (a "soft" market) generally leads to downward pressure on commission revenue and can materially impact profitability.

Planning & Forecasting: Due to factors outside of the Company's control, such as premium pricing changes and the timing of commission payments from insurance companies, it is difficult to accurately forecast commission revenue.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Brown & Brown operates in a highly regulated industry, requiring licenses for its employees and entities in all jurisdictions where it conducts business. In the U.S., the insurance business is primarily state-regulated, with state legislatures enacting laws affecting licensing, premium rates, policy forms, trade practices, data protection, and solvency standards. In the U.K., the Financial Conduct Authority regulates the insurance business. International Compliance: The Company is subject to additional non-U.S. laws, regulations, and policies in its international markets, including international labor and employment laws and data privacy requirements. Non-compliance could result in substantial fines, sanctions, or reputational harm.

Trade & Export Controls: The Company faces the burden of complying with anti-corruption laws in foreign countries and the risk of employees or third parties violating these laws.

Legal Proceedings: Brown & Brown is subject to numerous litigation claims arising in the ordinary course of business, including alleged errors and omissions. While the Company does not believe any current claims are material, future unfavorable resolutions could materially affect financial results. The Company maintains third-party insurance policies to mitigate exposure. Specific audits by the State of California (2020-2021 tax years for Saferide Motor Club, Inc.) and the State of New York (2021-2023 tax years for Brown & Brown, Inc.) are ongoing.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate on income from operations was 22.2% in 2025, compared to 23.1% in 2024.
• Geographic Tax Planning: Brown & Brown files consolidated federal and certain state income tax returns. The Company's general practice and intention are to reinvest the earnings of its non-U.S. subsidiaries in those operations, considering such earnings indefinitely reinvested.
• Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA), enacted in the U.S. in July 2025, includes provisions impacting the timing and magnitude of certain tax deductions (e.g., 100% bonus depreciation, increased business interest limitation, immediate expensing of R&D costs). The Company has applied OBBBA provisions and continues to assess potential impacts. The OECD's Pillar 2 global minimum corporate tax framework has been adopted by some countries where the Company operates but is not material to the Company in 2025 and is not expected to be in the future.

Insurance & Risk Transfer

Risk Management Framework: Brown & Brown integrates cybersecurity-related risk assessment, identification, and management into its overall enterprise risk management (ERM) program. The audit committee of the board of directors provides organization-wide oversight of information security. The Company maintains third-party insurance policies, including a cyber liability insurance policy and professional indemnity insurance, to provide coverage for certain legal claims and mitigate overall exposure.

Risk Transfer Mechanisms: The Company protects itself from claims-related losses in its Captives and Wright National Flood Insurance Company operations by reinsuring claims risk exposure and ceding liabilities to client-owned captive cells through cross-collateralization. All exposure from basic admitted policies conforming to the National Flood Insurance Program is 100% reinsured with FEMA. For other policies, exposure is reinsured with highly rated reinsurance carriers.