Brown & Brown NYSE: BRO reported first-quarter revenue of $1.9 billion, up 35.4% year over year, as the company pointed to higher contingent commissions and contributions from its Accession acquisition. President and CEO Powell Brown said results reflected “good financial results for Q1” and continued execution following what he described as “industry-leading top and bottom line performance” in 2025.
First-quarter results and new organic growth presentation
Powell Brown said organic revenue growth was flat versus the prior year, while organic growth including contingent commissions increased 2.2%. Both measures were pressured by prior-year flood claims processing revenue and continued declines in catastrophe property rates. The company said the flood claims processing revenue represented a nearly 100 basis point drag on organic growth.
Profitability improved in the quarter. Brown said adjusted EBITDAC margin increased 40 basis points to 38.5%, and adjusted earnings per share rose nearly 8% to $1.39. The company generated more than $260 million in operating cash flow.
Chief Financial Officer Andy Watts said the company is now also presenting “organic growth with contingents” as an additional performance measure, describing contingent commissions as “a core part of our business model” that can fluctuate quarterly but provides a reference point for margins and cash flow. Watts added that contingent commissions tend to rise when E&S rates are declining, creating “more stability in our revenues, margins, and cash flow.”
Contingent commissions, Accession impact, and segment performance
Watts said contingent commissions increased by $54 million, including $22 million from Accession. He attributed the underlying increase to minimal storm claim activity and higher underwriting profitability, primarily in specialty distribution.
Accession contributed approximately $445 million of revenue in the quarter, Watts said. However, he noted that due to quarterly phasing and legacy Brown & Brown’s seasonally strong employee benefits margins, Accession reduced adjusted EBITDA margins by about 200 basis points in the quarter. For the full year, the company still expects adjusted EBITDA margins for the Accession business to be around 35%.
- Retail: Organic revenue growth was 1.0% excluding contingents and 1.3% including contingents, which Brown attributed to rate conditions, a revenue model change in a pharmacy consulting business, and lower net new business. Retail EBITDA margin declined 130 basis points to 36%, driven by quarterly revenue and profit weighting differences between legacy Brown & Brown and Risk Strategies, according to Watts.
- Specialty distribution: Organic revenue increased 3.9% including contingents but decreased 2% excluding contingents, reflecting the absence of $12 million of flood claims processing revenue recorded in the prior-year quarter and pressure from catastrophe property rate declines, Brown said. Segment total revenue increased 40% on the Accession acquisition and higher contingents. Specialty distribution EBITDA margin increased 30 basis points to 40.8%.
Watts also detailed the specialty distribution contingent commission drivers, including $52 million of higher contingents, with $22 million tied to acquisition activity and $30 million to favorable underwriting performance. He said approximately $5 million was related to prior-year accrual adjustments, and about $10 million of contingents recorded in the first quarter had previously been recorded in the third and fourth quarters of 2025.
Insurance market conditions: bifurcated trends in property and casualty
Management described stable economic conditions through the quarter, though Powell Brown said geopolitical issues and the cost of oil and gas led some customers to become “slightly more cautious” late in the period.
On pricing, Brown said admitted P&C markets were generally flat to up 5% year over year, with workers’ compensation flat to down 3%. Non-catastrophe property pricing ranged from down 5% to up 5% depending on losses and location. For casualty, he said primary layers were up 2% to 5%, with excess layers rising “materially more.” In employee benefits, he cited medical cost increases of 8% to 10% and pharmacy costs up over 10%.
In the E&S market, Brown said catastrophe property continued to soften, with many placements down 15% to 35% in the quarter. In contrast, E&S casualty remained pressured, with higher limits “extremely challenging” and carriers reducing the limits they will offer. “We do not expect this trend to change materially over the coming quarters,” he said.
During Q&A, Brown said catastrophe property declines had been sharper than expected and extended beyond Florida, also affecting other catastrophe-prone areas and inland convective storm regions. When asked whether June renewals suggested the pace of catastrophe property rate decreases was slowing, Brown responded, “Haven’t seen that yet.”
Retail operating model changes, pharmacy consulting shift, and litigation commentary
Brown said the company is blending a former regional sales model at Risk Strategies with legacy Brown & Brown’s local model into a new approach emphasizing industry, line, and coverage specialization. He said the combined model is “unique unto ourselves” and has been “very positively received” by producers, with early signs of increased activity that could support improved performance in the second half of the year and into 2027.
He also said one pharmacy consulting business is shifting from a volume-based model to a per-employee-per-month (PEPM) model, which is expected to reduce retail organic growth by 50 to 100 basis points over the next couple of quarters, with growth expected to resume toward the end of the year.
Watts addressed the impact of litigation related to a startup broker, saying the company excluded from organic growth the impact of individuals who left and joined the startup, which was about $10 million in the first quarter. He said the startup had taken customers representing approximately $31 million of annual revenue as of the end of March, up from $23 million previously disclosed, and that the quarterly impact would reflect policy renewal timing.
Technology and AI: automation, productivity, and customer experience
Brown said Brown & Brown’s technology and data work began more than a decade ago with platform rationalization and data standardization, which he described as foundational for scaling AI. He said the company’s current efforts are aimed at driving revenue growth, improving customer experience, and enhancing teammate effectiveness by reducing manual and repetitive work.
He highlighted several AI-enabled tools that are already “live and delivering value,” including AI agents intended to automate more than 25% of the end-to-end submission process in many programs and wholesale businesses, retail policy-checking agents to automate proposal comparisons and policy reviews, and a proprietary billing interface platform that he said is saving more than 50,000 hours annually.
Brown also discussed potential AI exposure by customer segment, noting that accounts under $25,000 in premium and monoline personal lines represent about 1% to 2% of total retail revenues. He said the primary risk is customers deciding they no longer need a broker, but emphasized the role of trusted advice and breadth of carrier relationships.
Looking ahead, Brown said the company expects admitted rates to continue moderating slightly, while E&S rates remain bifurcated with casualty increasing and catastrophe property decreasing. He said integration work for Accession is on track to deliver $30 million to $40 million of EBITDA synergies this year, and that the company will remain focused on disciplined underwriting, deleveraging, technology investments, share repurchases, dividends, and tuck-in M&A.
About Brown & Brown NYSE: BRO
Brown & Brown, Inc NYSE: BRO is a professional insurance brokerage and risk advisory firm that provides a broad range of property and casualty, employee benefits, personal risk, and specialty insurance products. The company works with commercial, public sector and individual clients to design and place insurance programs, manage claims and loss control, and deliver risk management consulting. Its services also include wholesale brokerage, program administration and other specialty distribution solutions that connect carriers and intermediaries to niche markets.
Brown & Brown operates through a decentralized model of operating units and subsidiaries, enabling local client service with the scale to access national and specialty markets.
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