Brown & Brown, Inc. · NYSE:BRO

Brown & Brown — Investor Presentation (March 2021)

60 slides from Brown & Brown's investor presentation, Mar 2, 2021

Slide 2: Forward-looking statements
This presentation and the statements made during our presentation may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by t
Slide 3: Non-GAAP financial measures
This presentation contains references to "non-GAAP financial measures" as defined in SEC Regulation G, including EBITDAC, EBITDAC Margin, Diluted Net Income Per Share – Adjusted, Net Debt, Total Debt Outstanding to EBITDAC, Net Debt Outstanding to EBITDAC, Free Cash Flow, Free Cash Flow Conversion,
Slide 5: Investment Highlights
Investment Highlights Proven track record of profitable revenue growth – organic & via acquisitions Experienced leadership team & strong performance-based culture Balanced & highly diversified revenue base Platform operating model with broad distribution network that generates industry-leading finan
Slide 6: Brown & Brown At-A-Glance
Brown & Brown At-A-Glance Key Facts Historical Revenue & EBITDAC Margin Ownership 2020 Revenue by Segment Headquartered in Daytona Beach, Florida Founded in 1939 - 82 years of serving customers 11,000+ teammates as of December 31, 2020 Doing business in all 50 states; 332 domestic locations in 43 st
Slide 7: Power of Our Culture
Sales & Service Focused Ownership & Entrepreneur Decentralized Highly Competitive Common Goals Prideful Relationships Profit Oriented Lean High Quality & Integrity Power of Our Culture Power of Our Culture Lean Decentralized Profit Oriented Sales & Service Focused High Quality & Integrity Ownership
Slide 8: Vision
Vision To Be the Leading Insurance Broker Delivering Innovative Solutions to Our Customers Vision To Be the Leading Insurance Broker Delivering Innovative Solutions to Our Customers People Recruiting & Enhancing Business Money Making Business Selling & Servicing Insurance Business Innovative Solutio
Slide 9: All Segments Offer Attractive Growth Opportunities
1 Middle-market defined as businesses with between 50 and 2,500 employees All Segments Offer Attractive Growth Opportunities Market Profile Market Profile All Segments Offer Attractive Growth Opportunities Source of Revenue Margin National Account Fees Low - Medium Middle - Market1 Fees/Commissions
Slide 10: Decentralized Sales & Service Model
Decentralized Sales & Service Model Leverage National Scale – Sell & Service Locally IT Strategic Purchasing Branding Communications Finance/Treasury Acquisitions Legal Talent Development HR/Payroll Internal Audit/Compliance Acquisitions Segment Platforms IT Corporate Platforms Decentralized Sales &
Slide 11: Sustained Track Record of Profitable Growth & Integrating Acquisitions
Sustained Track Record of Profitable Growth & Integrating Acquisitions Acquired Canadian MGA and Irish retail agency Sustained Track Record of Profitable Growth & Integrating Acquisitions [BAR CHART] Sustained track record of profitable growth and integrating acquisitions Numbers in parenthesis deno
Slide 12: Balanced & Diversified Business Mix
Revenues by Segment ($M) 1993 2020 2000 $2,613 $210 $94 Balanced & Diversified Business Mix 1 1 1 1 Includes Other revenue Balanced & Diversified Business Mix Revenues by Segment ($M) 1 Includes Other revenue [BAR CHART] BB C 2021 Brown & Brown, Inc. All rights reserved. 11
Slide 13: Shareholder Value Creation
Shareholder Value Creation Internal Investments Acquisitions Return to Shareholders People, technology & new program investments must exceed hurdle rates Share repurchases to minimize dilution from equity plans & opportunistic buys Seek to deploy capital at rates exceeding hurdle rates 27 years of c
Slide 14: Reasons to Invest in Brown & Brown
Reasons to Invest in Brown & Brown Revenue Growth 9% 5 Yr. CAGR 10% 10 Yr. CAGR EBITDAC Margin 31% 5 Yr. Avg. 32% 10 Yr. Avg. Free Cash Flow Conversion 24% 5 Yr. Avg. 23% 10 Yr. Avg. Free Cash Flow Growth 12% 5 Yr. CAGR 9% 10 Yr. CAGR Free Cash Flow Yield 7% 5 Yr. Avg. 7% 10 Yr. Avg. Net Income Per
Slide 15: Total Shareholder Returns
Source: FactSet as of 12/31/2020 ¹ Calculated as change in share price plus total dividends paid 2 Represents median total shareholder returns of Arthur J. Gallagher & Co, Aon plc, Marsh & McLennan Companies, and Willis Towers Watson Public Limited Company. Total Shareholder Returns1 [BAR CHART] Tot
Slide 17: Segment Overview - Retail
Segment Overview - Retail Key Metrics Business Mix Differentiation Market Profile Culture of ownership and entrepreneurial thinking Breadth and depth of capabilities available to customers from small businesses to large multi-national entities Delivering solutions across all lines of business for ou
Slide 18: Retail Breadth & Depth of Expertise
The Retail Segment provides broad and deep expertise to our customers, while maintaining close proximity to the communities in which our customers operate their businesses. Breadth & Depth of Expertise Breadth & Depth of Expertise INDUSTRY Customers span hundreds of industry classifications with mor
Slide 19: Retail Capabilities
Property Casualty Workers’ Compensation Professional / Cyber Liability Captive Management & Actuarial Services Environmental Liability Claims & Loss Control Consulting / Analytics Group Medical, Benefits, Retirement & Savings Ancillary / Non-Medical Benefits F&I Dealership Services Revenue $1M $5B+
Slide 20: Investing for the Future
The Retail Segment continuously invests in our business to develop teammates, increase capabilities, improve the customer experience and enhance operational effectiveness in order to deliver world-class solutions & service to our customers. Investing for the Future Investing for the Future CAPABILIT
Slide 22: Segment Overview – National Programs
Segment Overview – National Programs Business Overview Programs Brown & Brown National Programs is a leading program administrator (Managing General Agent / Managing General Underwriter). Our National Programs team partners with insurance companies and provides services such as underwriting, distrib
Slide 23: National Programs Breadth & Depth of Expertise
CAPABILITIES MARKETS 100+ carrier relationships Robust marketing team Nationwide retail distribution network The National Programs Segment delivers broad and deep expertise to its carrier partners and tailored solutions for distribution partners to drive efficient and effective placement of coverage
Slide 24: National Programs provides carriers with complete infrastructure
National Programs provides carriers with the complete infrastructure to launch and manage broad or niche programs. Solutions Carriers Focus On: Capital investments Established program metrics Portfolio underwriting management Reinsurance Risk management Solutions Carriers Focus On: • Capital investm
Slide 26: Segment Overview – Wholesale Brokerage
Segment Overview – Wholesale Brokerage Key Metrics Business Mix Business Overview Key Go-to-Market Brands The Wholesale Brokerage Segment primarily places excess and surplus commercial insurance through a broad, nationwide network of retail agents, including Brown & Brown retail agents. Capabilities
Slide 27: Wholesale Product & Underwriting Expertise
Open market brokerage & full underwriting binding authority Product-specific expertise Layering expertise Modeling expertise Product development team Policy forms High-risk property/casualty exposures Transportation, auto, garage Personal lines Financial & professional exposures Rental car programs
Slide 29: Segment Overview - Services
Segment Overview - Services Key Metrics Business Mix Business Overview Businesses The Services Segment is composed of claims advocacy, claims adjusting, and claims processing businesses; including property, auto, and workers compensation. These businesses work on behalf of our carrier partners, publ
Slide 30: Services Capabilities
Specialized claims services Compliance solutions Experience and scope Data and analytics Nationwide expert network Nationwide coverage Customer-centric service model Robust claims management Scalable & flexible technology Loss control/safety programs Services Capabilities Claims TPA Medicare Set-Asi
Slide 32: Disciplined M&A Strategy
Disciplined M&A Strategy Consistent due diligence process and price accordingly Corporate and segment teams involved Sponsor responsible post acquisition Integrate Finance, IT, and HR Create long-term shareholder value Find high-quality businesses and teams that fit culturally Expand geographic pres
Slide 34: Technology Evolution
Technology Evolution Standardize Innovate Business Value Maturity Value Impact Information Technology Maturity Operational Excellence Service Excellence Technology Evolution Operational Excellence Service Excellence Information Technology Maturity Business Value Maturity BB C 2021 Brown & Brown, Inc
Slide 35: Innovation Agenda
Innovation Agenda Prefill External, Third Party Data Aggregation Solution Creation Robotic Process Automation Predictive Analytics Claims, Marketing, Underwriting, Pricing & Operations Claims Settlement Automation AI-Based Applications Chatbots, Policy Checking & Commercial Underwriting Curated Quot
Slide 36: InsurTech Engagement
InsurTech Engagement Tracking & Monitoring InsurTech Engagement Demos & Introductions Tracking & Monitoring NDA - Deeper Evaluation Proof of Concept In Production BB C 2021 Brown & Brown, Inc. All rights reserved. 35
Slide 38: Performance vs. Peers & Market
Performance vs. Peers & Market Source: FactSet as of 12/31/2020 1 Peers are Arthur J. Gallagher & Co, Aon plc, Marsh & McLennan Companies, and Willis Towers Watson Public Limited Company 2 S&P 500 revenue growth calculated as change in the sum of adjusted sales over the prior year’s adjusted sales (
Slide 39: Strong & Consistent Free Cash Flow Conversion
Strong & Consistent Free Cash Flow Conversion Source: FactSet as of 12/31/2020, SNL Financial 1 Peers are Arthur J. Gallagher & Co, Aon plc, Marsh & McLennan Companies, and Willis Towers Watson Public Limited Company 1 See important disclosures regarding Non-GAAP measures on page 2 and Non-GAAP reco
Slide 40: Industry-Leading Free Cash Flow Yield
1 Industry-Leading Free Cash Flow Yield Source: FactSet as of 12/31/2020 1 Peers are Aon plc, Arthur J. Gallagher & Co, Marsh & McLennan Companies, and Willis Towers Watson Public Limited Company See important disclosures regarding Non-GAAP measures on page 2 and Non-GAAP reconciliations on pages 47
Slide 41: Strong Cash Generation
10-Year CAGR = 10.6% ($) in Millions $4752 $2542 1 Defined as Net cash provided by operating activities 2 Reflects acceleration of $50M in annual bonus payments from January 2013 into December 2012; bonuses are traditionally paid in January. Strong Cash Generation¹ Strong Cash Generation¹ 1 Defined
Slide 43: Diluted Net Income Per Share – Adjusted
10-Year CAGR = 11.6% Diluted Net Income Per Share – Adjusted See important disclosures regarding Non-GAAP measures on page 2 and Non-GAAP reconciliations on pages 47-59 Diluted Net Income Per Share – Adjusted [BAR CHART] See important disclosures regarding Non-GAAP measures on page 2 and Non-GAAP re
Slide 44: Balanced Long-Term Capital Deployment
($) in Millions 1 Defined as net cash provided by operating activities. 2 Includes original purchase price plus subsequent earnout payments Balanced Long-Term Capital Deployment 2 2 Balanced Long-Term Capital Deployment [BAR CHART] 1 Defined as net cash provided by operating activities. 2 Includes o
Slide 45: Financial & Capital Allocation Policy; Liquidity Profile
Financial & Capital Allocation Policy Liquidity Profile Committed to maintaining low leverage, industry leading margins, high Free Cash Flow Conversion, and Investment Grade ratings Optimize financial flexibility in line with growth objectives Target Net Debt Outstanding to EBITDAC ratio of 0 – 2.5x
Slide 47: Closing Comments
Closing Comments Business well positioned to capture future growth opportunities Economic outlook primary driver of exposure growth & premium rates increases remain positive Balanced capital strategy & liquidity to deliver long-term shareholder value Investing in technology to improve customer & tea
Slide 49: Income Before Income Taxes to EBITDAC
Income Before Income Taxes to EBITDAC See important disclosures regarding Non-GAAP measures on page 2. Income Before Income Taxes to EBITDAC ($ Millions, Except Per Share Data; Unaudited) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Income before income taxes $270.5 $304.8 $357.6 $339.7 $402.6
Slide 50: Income Before Income Taxes to EBITDAC – Retail and National Programs
Income Before Income Taxes to EBITDAC See important disclosures regarding Non-GAAP measures on page 2 Income Before Income Taxes to EBITDAC ($ Millions, Except Per Share Data; Unaudited) Retail National Programs 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Income before income taxes $188.0 $196
Slide 51: Income Before Income Taxes to EBITDAC – Wholesale Brokerage and Services
Income Before Income Taxes to EBITDAC See important disclosures regarding Non-GAAP measures on page 2. Income Before Income Taxes to EBITDAC ($ Millions, Except Per Share Data; Unaudited) Wholesale Brokerage Services 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Income before income taxes $62.6
Slide 52: Net Cash Provided by Operating Activities to Free Cash Flow
Net Cash Provided by Operating Activities to Free Cash Flow See important disclosures regarding Non-GAAP measures on page 2. Net Cash Provided by Operating Activities to Free Cash Flow ($ Millions, Except Per Share Data; Unaudited) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Stock Price, as of
Slide 53: Diluted Net Income Per Share - Adjusted
Diluted Net Income Per Share - Adjusted See important disclosures regarding Non-GAAP measures on page 2. Diluted Net Income Per Share - Adjusted ($ Millions, Except Per Share Data; Unaudited) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Diluted Net Income per Share $0.57 $0.63 $0.74 $0.71 $0.85
Slide 54: Reconciliation of Commissions & Fees to Organic Revenue 2020
See important disclosures regarding Non-GAAP measures on page 2. Reconciliation of Commissions & Fees to Organic Revenue ($ Millions; Unaudited) 2020 Retail National Programs Wholesale Brokerage Services Total 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Commissions and fees $1,470.1 $1,364.8 $
Slide 55: Reconciliation of Commissions & Fees to Organic Revenue 2019
See important disclosures regarding Non-GAAP measures on page 2. Reconciliation of Commissions & Fees to Organic Revenue ($ Millions; Unaudited) 2019 Retail National Programs Wholesale Brokerage Services Total 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Commissions and fees $1,364.8 $1,040.6 $
Slide 56: Reconciliation of Commissions & Fees to Organic Revenue 2018
See important disclosures regarding Non-GAAP measures on page 2. Reconciliation of Commissions & Fees to Organic Revenue ($ Millions; Unaudited) 2018 Retail National Programs Wholesale Brokerage Services Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Commissions and fees $1,040.6 $942.0 $49
Slide 57: Reconciliation of Commissions & Fees to Organic Revenue 2017
See important disclosures regarding Non-GAAP measures on page 2. Reconciliation of Commissions & Fees to Organic Revenue ($ Millions; Unaudited) 2017 Retail National Programs Wholesale Brokerage Services Total 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Commissions and fees $942.1 $916.1 $479.
Slide 58: Reconciliation of Commissions & Fees to Organic Revenue 2016
See important disclosures regarding Non-GAAP measures on page 2. Reconciliation of Commissions & Fees to Organic Revenue ($ Millions; Unaudited) 2016 Retail National Programs Wholesale Brokerage Services Total 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Commissions and fees $916.1 $866.5 $447.
Slide 59: Reconciliation of Total Debt to Net Debt
See important disclosures regarding Non-GAAP measures on page 2 Reconciliation of Total Debt to Net Debt ($ Millions, Except Per Share Data; Unaudited) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Current portion of long-term debt $1.2 $0.1 $100.0 $45.6 $73.1 $55.5 $120.0 $50.0 $55.0 $70.0 Long
Slide 60: The Cheetah
The Cheetah: Since our beginning, we have known that doing the best for our customers requires constant persistence and vision. The cheetah, which represents vision, swiftness, strength, and agility, embodies our company culture and has served as a symbol for Brown & Brown since the 1980s. For addit

Brown & Brown — Investor Presentation (March 2021) on 6ix

Brown & Brown — Investor Presentation (March 2021)

Slide 1: Company Overview 2021

Slide 2: Forward-looking statements

Slide 3: Non-GAAP financial measures

Slide 4: Company Overview

Slide 5: Investment Highlights

Slide 6: Brown & Brown At-A-Glance

Slide 7: Power of Our Culture

Slide 8: Vision

Slide 9: All Segments Offer Attractive Growth Opportunities

Slide 10: Decentralized Sales & Service Model

Slide 11: Sustained Track Record of Profitable Growth & Integrating Acquisitions

Slide 12: Balanced & Diversified Business Mix

Slide 13: Shareholder Value Creation

Slide 14: Reasons to Invest in Brown & Brown

Slide 15: Total Shareholder Returns

Slide 16: Retail Segment

Slide 17: Segment Overview - Retail

Slide 18: Retail Breadth & Depth of Expertise

Slide 19: Retail Capabilities

Slide 20: Investing for the Future

Slide 21: National Programs Segment

Slide 22: Segment Overview – National Programs

Slide 23: National Programs Breadth & Depth of Expertise

Slide 24: National Programs provides carriers with complete infrastructure

Slide 25: Wholesale Brokerage Segment

Slide 26: Segment Overview – Wholesale Brokerage

Slide 27: Wholesale Product & Underwriting Expertise

Slide 28: Services Segment

Slide 29: Segment Overview - Services

Slide 30: Services Capabilities

Slide 31: Acquisitions

Slide 32: Disciplined M&A Strategy

Slide 33: Technology & Innovation

Slide 34: Technology Evolution

Slide 35: Innovation Agenda

Slide 36: InsurTech Engagement

Slide 37: Financial Performance

Slide 38: Performance vs. Peers & Market

Slide 39: Strong & Consistent Free Cash Flow Conversion

Slide 40: Industry-Leading Free Cash Flow Yield

Slide 41: Strong Cash Generation

Slide 42: Diluted Net Income Per Share

Slide 43: Diluted Net Income Per Share – Adjusted

Slide 44: Balanced Long-Term Capital Deployment

Slide 45: Financial & Capital Allocation Policy; Liquidity Profile

Slide 46: Closing Comments

Slide 47: Closing Comments

Slide 48: GAAP to Non-GAAP Reconciliation Appendix

Slide 49: Income Before Income Taxes to EBITDAC

Slide 50: Income Before Income Taxes to EBITDAC – Retail and National Programs

Slide 51: Income Before Income Taxes to EBITDAC – Wholesale Brokerage and Services

Slide 52: Net Cash Provided by Operating Activities to Free Cash Flow

Slide 53: Diluted Net Income Per Share - Adjusted

Slide 54: Reconciliation of Commissions & Fees to Organic Revenue 2020

Slide 55: Reconciliation of Commissions & Fees to Organic Revenue 2019

Slide 56: Reconciliation of Commissions & Fees to Organic Revenue 2018

Slide 57: Reconciliation of Commissions & Fees to Organic Revenue 2017

Slide 58: Reconciliation of Commissions & Fees to Organic Revenue 2016

Slide 59: Reconciliation of Total Debt to Net Debt

Slide 60: The Cheetah