2021 brokerage revenue: $3.05B
Percent increase: 16.9%
Brown & Brown Inc. posted strong organic revenue growth in 2021 and continues to grow through acquisitions, including two sizeable deals this year that mark a further expansion of its international footprint.
The Daytona Beach, Florida-based brokerage’s organic growth of 10.4% was fueled partly by rising property/casualty insurance rates, said J. Powell Brown, president and CEO. “And we were very pleased with the amount of new business we wrote and the retention of our existing clients,” he said.
Brown & Brown’s organic revenue growth was well above the average of its peers, said C. Gregory Peters, managing director-equity research with Raymond James & Associates Inc. in St. Petersburg, Florida. “The pieces of the puzzle that are important to the future of the company, including being positioned for organic revenue growth” and opportunistic acquisitions, “seem to be in place for them to continue to do well this year,” he said.
Brown & Brown reported 2021 brokerage revenue of $3.05 billion, a 16.9% increase over the previous year. The company retained its No. 6 position in Business Insurance’s ranking of the world’s largest brokerages.
Brown & Brown posted $904.7 million in revenue for the first quarter of this year, up 11% year over year. Organic growth of 7.8% was lower than the 9.8% for the same quarter in 2021.
Like other brokers, Brown & Brown rode the rising tide of an improving economy as the COVID-19 crisis ebbed, said Paul Newsome, managing director at Piper Sandler & Co. in Minneapolis. “We saw a rebound in organic growth in part because of the recovery from the pandemic. It’s been overall a pretty good environment for insurance brokers.”
Brown & Brown completed 19 acquisitions in 2021 with combined annual revenue of around $132 million. Fifteen of the deals 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 completed in January 2021, the second international deal for Brown & Brown. Its first, completed in 2020, was the acquisition of Special Risk Insurance Managers, a Langley, British Columbia-based MGA. 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-based wholesaler BDB Ltd. and London-based brokerage Global Risk Partners Ltd.
“This is important for them as part of the natural evolution to become a global platform,” Mr. 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 U.S. brokers that have made forays into the United Kingdom and Ireland in recent years, Mr. Newsome said. “Selling insurance in English-speaking countries with stable regulations and governments” is easier than pursuing deals in areas where those conditions may not exist, he said.
Brown & Brown has operated in London since 2008 when it opened a business there, Mr. Brown said.
The brokerage also agreed in this year’s first quarter to acquire Vero Beach, Florida-based managing general agent Orchid Underwriters Agency and its subsidiary CrossCover Insurance Services. Together with the BDB and Global Risk Partners deals, the brokerage agreed to spend around $2.5 billion for the three acquisitions, financing the transactions with around $2 billion in newly issued debt and available cash on hand.
Meanwhile, the 2020 acquisition of CoverHound Inc., a San Francisco-based online insurance platform, has helped Brown & Brown grow in the digital insurance sector, which is an area where the brokerage would like to expand further, Mr. Brown said.
“We’re very pleased with CoverHound; it helped us move into an area of the market that we were not in from a digital standpoint,” Mr. Brown said.
The brokerage is looking into how the platform might potentially be used within its national programs and wholesale business segments, he said.
“We would consider something in the same space,” he said of future digital deals, “if it was additive to what we already have. We’re not trying to buy something that is duplicative in that space.”