Brown & Brown Q2 Earnings Call Highlights

Key Points

• Strong revenue growth: Brown & Brown’s second-quarter revenue rose 30.4% to $1.7 billion, driven largely by acquisitions and higher contingent commissions. Adjusted EPS increased 3.9% to $1.07, while the adjusted EBITDAC margin declined 100 basis points to 35.7%.
• Organic performance was mixed: Organic revenue fell 0.7% excluding contingent commissions, with Retail growing 1.5% and Specialty Distribution declining 3.5%. Management expects second-half organic growth of 1.5%–2.5% in Retail and 2%–4% in Specialty Distribution, excluding contingents.
• Pricing pressure and AI investments shape the outlook: Catastrophe-property insurance rates continued to fall 15%–35%, while casualty and professional liability pricing remained firmer. The company is partnering with Anthropic, McKinsey and Accenture on AI initiatives aimed at improving productivity and margins without materially increasing technology spending.

Brown & Brown NYSE: BRO reported second-quarter revenue of $1.7 billion, up 30.4% from a year earlier, as acquisition activity and higher contingent commissions helped offset pressure from declining catastrophe-property insurance rates.

Chief Executive Officer Powell Brown said the company’s results came in modestly ahead of its expectations despite continued declines in catastrophe-property pricing. Adjusted diluted earnings per share increased 3.9% to $1.07, while adjusted EBITDAC rose 27%. The company’s adjusted EBITDAC margin declined 100 basis points year over year to 35.7%.

“We’re pleased with our financial performance for the quarter,” Brown said, pointing to the work of the company’s employees in providing risk-management solutions to customers.

Organic Growth Varies by Segment

Organic revenue declined 0.7% from the prior-year period, but increased 0.7% when contingent commissions were included. Brown said the company began providing both measures because contingent commissions can fluctuate by quarter and because many peers do not separately disclose them.

In the Retail segment, organic revenue grew 2.5% including contingent commissions and 1.5% excluding them. Brown said net new business was better than expected and contingent commissions were particularly strong, although he added that Retail’s organic growth “is not where we want it to be yet.”

The company is working to combine two large organizations and said its enhanced go-to-market sales model is gaining momentum as teams collaborate on new business opportunities. CFO Andy Watts said Retail’s total revenue increased 35.9%, primarily due to acquisitions completed over the past year.

Retail’s organic growth was negatively affected by approximately 60 basis points from a pharmacy consulting business, according to Watts. The company also recorded an $18 million current-period adjustment to organic revenue related to litigation involving employees who left to join a startup broker. Brown & Brown expects the full-year revenue impact from new and lost business and incentive commissions associated with the matter to be between $50 million and $60 million.

Specialty Distribution organic revenue declined 1.6% including contingent commissions and 3.5% excluding them. Those measures were reduced by nearly 200 basis points because about $10 million of new-business revenue from one program was delayed and is expected to be recorded substantially in the third quarter, Brown said.

Specialty Distribution total revenue rose 28.1%, aided by the acquisition of Accession and increased contingent commissions. The segment’s EBITDAC margin fell 400 basis points to 42.7%, reflecting lower organic growth and investments in European wholesale and programs capabilities.

Accession Contribution and Capital Allocation

Brown & Brown recognized about $410 million in quarterly revenue from Accession, with margins in line with expectations, Watts said. He said the acquired business is expected to operate at roughly a 35% margin overall and should not materially add to or subtract from the company’s consolidated margin, though it lowers Specialty Distribution’s reported margin because legacy programs and wholesale operations had higher margins.

The company also disposed of a non-core Retail business with annual revenue of approximately $30 million to $35 million.

Cash flow from operations totaled approximately $610 million during the first six months of 2026, up $70 million, or 13%, from the prior-year period. Cash-flow conversion was affected by nonrecurring Accession-related items, including higher-than-anticipated final earn-out payments, as well as the timing of working capital. Watts said the earn-out effect was a one-time item and that the company still expects long-term cash-flow conversion of roughly 24% to 27%.

Over the past nine months, Brown & Brown repurchased approximately nine million shares, partially offsetting shares issued in connection with the Accession acquisition. The company said it will continue to prioritize hiring, share repurchases, debt reduction, technology investments and selective acquisitions that add specialized capabilities rather than simply scale.

Insurance Pricing Remains Mixed

Brown said commercial insurance pricing trends were broadly similar to the first quarter. Workers’ compensation and non-catastrophe property rates were generally flat to down 5%, while primary casualty and professional liability rates were generally up 5%. Excess casualty layers faced more pricing pressure.

Catastrophe-property rates continued to decline by 15% to 35%, driven by ample underwriting capital and supply exceeding demand. Brown said some customers are retaining the savings while others are using lower prices to modify coverage structures, limits or deductibles.

For employee benefits, medical costs remained up 8% to 10%, while pharmacy costs increased more than 10%. Brown said those cost trends are supporting demand for the company’s advisory and consulting services.

For the second half, Brown & Brown expects Retail organic growth excluding contingents of 1.5% to 2.5% and Specialty Distribution organic growth excluding contingents of 2% to 4%.

AI Strategy and Outlook

The company said it has entered partnerships with Anthropic, McKinsey & Company and Accenture to advance its artificial intelligence strategy. Brown said Brown & Brown views AI as an enabler for employees rather than a replacement for risk advisers, brokers or delegated underwriters.

The company is targeting improvements in sales, service, underwriting, placement, submissions and support functions. Brown said it expects AI, data and analytics to support faster cycle times, higher productivity, stronger organic growth and margin expansion over time.

Management does not currently expect incremental technology spending, saying it can redirect resources from existing operations toward data analytics, innovation and AI. Watts said the company will monitor implementation pace and the organization’s ability to absorb change, and would communicate any material changes in spending expectations.

Brown & Brown reaffirmed its expectation to generate $30 million to $40 million in integration synergies this year and said it expects insurance-market and economic conditions in the second half to remain generally consistent with recent quarters.

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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