Brown & Brown, Inc. · NYSE:BRO
Brown & Brown — Investor Day (September 2023)
76 slides from Brown & Brown's investor day presentation, Sep 14, 2023
Slide 1: Investor Day September 14, 2023
Investor Day September 14, 2023 BROWN & BROWN, INC.
Slide 2: Information Regarding Forward-Looking Statements
Information Regarding Forward-Looking Statements This presentation and the statements made during our presentation may contain certain statements relating to future results which are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the S
Slide 3: Information Regarding Non-GAAP Measures
Information Regarding Non-GAAP Measures This presentation contains references to "non-GAAP financial measures" as defined in SEC Regulation G, consisting of Organic Revenue, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted Post FX, EBITDAC Margin - Adjusted Post FX and Diluted Net Income Per Share - Adju
Slide 4: Information Regarding Non-GAAP Measures - Continued
Information Regarding Non-GAAP Measures - Continued Other Non-GAAP Financial Measures - We believe these non-GAAP measures, as defined below, are useful to monitor our leverage and evaluate our balance sheet. Net Debt is defined as Total Debt Outstanding less cash and cash equivalents excluding rest
Slide 5: Company Overview
Company Overview
Slide 6: Our Vision
Be the leading global provider of insurance solutions for our customers. Our Vision
Slide 7: Business Highlights
Business Highlights Long-term track record of profitable revenue growth - organic and via acquisition Experienced leadership team and strong performance-based culture Highly diversified revenue base, deep expertise and broad distribution network Operating model consistently generates industry-leadin
Slide 8: Brown & Brown at a Glance
2022 Revenue by Segment Historical Revenue & EBITDAC Margin - Adjusted Post FX Headquartered in Daytona Beach, Florida Founded in 1939 16,000+ teammates as of June 30, 2023 Doing business throughout the United States, Canada, United Kingdom, Western Europe, Bermuda and Cayman Islands Serving custome
Slide 9: Key Cultural Attributes
Key Cultural Attributes Leaders vs. Managers Internal Ownership Think Long Term Profitable Growth Teammates vs. Employees 1 2 3 4 5
Slide 10: What Differentiates Brown & Brown?
Acquisitive Strong balance sheet Entrepreneurial meritocracy Accountable & disciplined Performance-based culture Profitable growth Decentralized sales & service Significant teammate ownership Highly talented leaders & teammates What Differentiates Brown & Brown?
Slide 11: Core Operating Philosophies
Core Operating Philosophies We are in the people recruiting and enhancing business. We are in the money-making business. We are in the selling and servicing business. We are in the delivering innovative solutions business. NO BIG MISTAKES
Slide 12: Decentralized Sales & Service Model
Business & Customer-Facing Functions Decentralized Sales & Service Model Driving operational efficiency by centralizing certain functions, while enabling sales and service decisions at the local level. Branding & Communications Finance Legal Acquisitions Internal Audit & Compliance Enterprise & Segm
Slide 13: Customer Segments
1 Middle-market defined as businesses with between 50 and 2,500 employees Middle Market1 Large Accounts Small to Medium Enterprises & Personal Lines All offer attractive growth opportunities Customer Segments
Slide 14: Sustained Record of Revenue Growth
Sustained Record of Revenue Growth Added to the S&P 500 Index in 2021 and the S&P 500 Dividend Aristocrats in 2022 Total Revenues ($) in Millions Annual revenue $2.6B Acquired Special Risk (entry into Canada) 2020 Annual Revenue $2B Acquired The Hays Group 2018 Acquired Beecher Carlson 2013 Acquired
Slide 15: Shareholder Value Creation
Investments in people, technology and innovation Share repurchases and dividends Dividend Aristocrat1 - 29 years of increases Increase capabilities, enhance talent and drive growth 1 Dividend Aristocrat is an S&P measure Acquisitions Returns to Shareholders Shareholder Value Creation Internal Invest
Slide 16: Total Shareholder Returns
Total Shareholder Returns1 as of August 31, 2023 Total Shareholder Returns 1 Yr. 3 Yr. 5 Yr. 10 Yr. 15 Yr. 20 Yr. BRO 18% 63% 153% 429% 771% 1,094% Peers2 18% 70% 146% 411% 748% 1,065% S&P 500 15% 33% 65% 215% 334% 489% Source: CapIQ as of 8/31/2023 and calculated on a trailing 12-month basis 1 Calc
Slide 17: Retail Segment
| alal Retail Segment
Slide 18: Growth has no finish line...
Growth has no finish line... No matter where you are on your growth journey, we can help you find solutions to meet your ever-evolving insurance and risk management needs. If you are a highly complex multi-national company, an individual or anything in between, our experienced teams can help every s
Slide 19: Retail Segment Overview
OVERVIEW Retail Segment Key Metrics 2022 Avg. 3 Yr. Avg. 5 Yr. Revenue Growth 17.9% 15.2% 17.4% Organic Revenue Growth 6.5% 6.7% 5.6% EBITDAC Margin - Adjusted Post FX 30.9% 30.4% 29.6% Drive a culture of accountability, innovation and entrepreneurial thinking Offer a broad range of capabilities, fr
Slide 20: Breadth & Depth of Capabilities
Breadth & Depth of Capabilities The Retail segment provides broad and deep specialization to our customers while maintaining close proximity to the communities in which our customers live and operate their businesses. Placing coverage for almost every line of business with more than 1,000 carrier pa
Slide 21: Retail Operating Vision
Retail Operating Vision Continue strong Organic Revenue growth in all market environments Maintain profitable growth model Implement strategies, solutions and service models across market segments Deep collaboration and execution across Retail Recruitment and growth of talent Continue to invest in t
Slide 22: National Programs Segment
National Programs Segment
Slide 23: National Programs: specialty niche programs
We provide insurance carriers with a complete infrastructure and distribution network to launch and manage a broad array of specialty niche programs. We underwrite more than $5.5 billion in written premium in the personal, commercial, specialty, professional liability and public entity segments.
Slide 24: National Programs Segment Overview
OVERVIEW National Programs Segment Business Overview Leading program administrator (MGA / MGU) Partner with insurance companies to provide full turn-key services Capabilities include underwriting, distribution management, policy administration and claims handling Provide efficient and effective dist
Slide 25: Pure Production to Fully Outsourced Model
Pure Production Model Fully Outsourced Model Agent/Broker/ Wholesaler Appointment Managing General Underwriter (MGU) Managing General Administrator (MGA) Program Administrator Binding Authority Delegated Underwriting Authority Enterprises (DUAE) MGA/MGU Distribution Channel Intermediary between insu
Slide 26: National Programs Premium and Brands
$5.5B+ Premium 60+ Programs Brands *Acquisition of Kentro Capital Limited d/b/a Nexus Underwriting and Xenia Broking (Kentro) expected to close in Q4 2023 *
Slide 27: Broad & Diverse Capabilities
Broad & Diverse Capabilities All risk / commercial wind Automotive aftermarket Commercial earthquake Commercial transportation Daily rental Excess liability Manufactured housing Shipping insurance Sports & entertainment Trade credit Workers’ compensation Commercial Lines Flood Homeowners Residential
Slide 28: Major Carrier Relationships
Major Carrier Relationships* *Subject to change due to market conditions AIG LLOYD’S ALLIANZ MS TRANSVERSE AMERICAN FINANCIAL GROUP MUNICH RE ARCH INSURANCE GROUP NATIONAL GENERAL ASCOT OLD REPUBLIC ASPEN PALOMAR BERKSHIRE HATHAWAY INC. QBE EVEREST SCOR FAIRFAX ZURICH
Slide 29: Strategies to Success
Strategies to Success Recognized by our carrier partners for delivering superior underwriting results Powerful distribution relationships that deliver outstanding customer experience Maximize position as one of the world’s largest MGA / MGU operators Product innovation core to our value proposition
Slide 30: Wholesale Brokerage Segment
Wholesale Brokerage Segment
Slide 31: Core Strategic Pillars
Our business is built on a set of core strategic pillars: Differentiation in the marketplace through continuous innovation of both product and segment specialization Talent acquisition and career development Greater internal connectivity to ensure that we provide the broadest set of solutions to our
Slide 32: Wholesale Brokerage Segment Overview
OVERVIEW Wholesale Brokerage Segment Key Metrics 2022 Avg. 3 Yr. Avg. 5 Yr. Revenue Growth 12.4% 13.5% 10.8% Organic Revenue Growth 7.6% 7.0% 6.8% EBITDAC Margin - Adjusted Post FX 32.1% 32.3% 32.1% Business Mix Binding Authority Brokerage See important disclosures regarding Non-GAAP measures on pag
Slide 33: Our Platforms
Our Platforms Binding Authority National & Regional Brokerage International / Lloyds Personal Lines Admitted Market Access
Slide 34: Capabilities and Specialties
Network Network Product Specialization Data-driven insights and analysis across customer life cycle International via London brokerage and MGA platforms Market aggregator platforms National / regional-delegated underwriting capabilities Product development team Risk modeling High-risk primary and ex
Slide 35: The Power of WE: Building for Our Future
Product development and vertical practice groups Recruitment and career development Regional US expansion International M&A Greater internal connectivity Retail partners, omnichannel and digital Technology, data and digital Expansion Capabilities Distribution Operational The Power of WE Talent Build
Slide 36: Brown & Brown Europe
Brown & Brown Europe
Slide 37: Our Businesses
Our Businesses Locally distributed sales and service with central support Entrepreneurial leadership Divisional structure similar to North American model Twin growth pillars - M&A and Organic Revenue Key Components of Model Established London wholesale broker 2008 2021 2022 2023 Established retail f
Slide 38: Brown & Brown Europe
. Over 150 locations and 3K+ teammates, across 11 countries Strong retail presence across UK and Ireland London markets wholesale business - global customer base Cross-class programs capability with geographic distribution (Canada, Europe, UK, US) Retail: UK and Ireland, broad capabilities, serving
Slide 39: Diversified Business Footprint
z Diversified Business Footprint Focus on combination of Organic Revenue growth and acquisitions Target countries with rule of law, stable governments and stable economies Expand geographically while adding new capabilities Continue disciplined growth strategy Strategic Growth Plan *Kentro acquisiti
Slide 40: The Power of WE
The Power of WE Align Capabilities Enhance Collaboration Operationalize Investments / Scaling Resources
Slide 41: Services Segment
Services Segment
Slide 42: Services Segment Overview
OVERVIEW Services Segment Business Overview Key Metrics 2022 Avg. 3 Yr. Avg. 5 Yr. Revenue Growth (3.9%) (3.8%) 1.1% Organic Revenue Growth (2.9%) (3.6%) (2.7%) EBITDAC Margin - Adjusted Post FX 19.1% 20.3% 21.0% Composed of claims advocacy, managed care, claims adjusting and claims processing busin
Slide 43: Services Capabilities
Services Capabilities Claims TPA Medicare Set-aside / Social Security Specialized claims services Compliance solutions Experience & scope Data & analytics Nationwide expert network Nationwide coverage Customer-centric service model Robust claims management Scalable & flexible technology Loss control
Slide 44: Acquisitions
Acquisitions
Slide 45: Acquisition Strategy
Acquisition Strategy Successful integration of more than 625* acquisitions. *Acquisitions from 1993 through June 30, 2023 Principles Rationale Create long-term shareholder value Find high-quality talent that fits culturally Enhance and expand our capabilities Expand geographic presence Leverage carr
Slide 46: Acquisitions Overview and Typical M&A Structure
Minimum and maximum purchase price Agreed-upon baseline and projected pro forma Earnout typically calculated based upon financial performance over a one to three year period Structured to retain new teammates Leverage proven integration plans Acquired Revenue1 (in Millions) 10-yr avg $163 1 Represen
Slide 47: Technology & Innovation
Technology & Innovation
Slide 48: Technology Evolution and Innovation Agenda
Production Stability & Security Innovation Agenda Technology Evolution Actionable Analytics 2 1 3 Data-driven decisions are driving results and providing actionable insights to improve solutions Deliver solution recommendations integrated in teammates' workflows Continue to find ways for small innov
Slide 49: Key Focus Areas
Key Focus Areas Enhance the customer experience Deepen carrier relationships Increase process efficiency Enable innovation Fuel sales & growth Cybersecurity awareness Fit-for-purpose security program Business enabler Industry thought leadership Security integrated into operating model Security as a
Slide 50: Talent
Talent
Slide 51: Our People Strategy
Listening to our teammates through BE Our Best Survey, TRGs, focus groups and more Creating opportunities for teammates to grow their careers, personal wealth and network Immersive onboarding experience Developing future leaders through robust development, next-level leadership as well as an inclusi
Slide 52: Teammate Snapshot
Teammate Snapshot Teammate Resource Groups 16k+ As of June 30, 2023 What Teammates Say 94% 95% Feel accomplished and a sense of pride in their work Feel they are given a lot of responsibility Think management is honest, ethical and competent Felt welcome when they joined our team of teammates say we
Slide 53: Financial Performance
Financial Performance
Slide 54: Strong Revenue Growth
Strong Revenue Growth 1 2 Source: FactSet as of 12/31/2022 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 (adjust
Slide 55: Consistently Strong Margins
Consistently Strong Margins EBITDAC Margin 1 Source: FactSet as of 12/31/2022 1 Peers are Arthur J. Gallagher & Co, Aon plc, Marsh & McLennan Companies and Willis Towers Watson Public Limited Company See important disclosures regarding Non-GAAP measures on pages 2-3 and Non-GAAP reconciliations on p
Slide 56: Industry-Leading Free Cash Flow Conversion
Industry-Leading Free Cash Flow Conversion Source: FactSet as of 12/31/2022 1 Peers are Arthur J. Gallagher & Co, Aon plc, Marsh & McLennan Companies and Willis Towers Watson Public Limited Company See important disclosures regarding Non-GAAP measures on pages 2-3 and Non-GAAP reconciliations on pag
Slide 57: Cash Flow from Operations
Cash Flow from Operations1 ($) in Millions $4752 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 3 Cash flow for years 2020 and 2021 have been restated unde
Slide 58: Diluted Net Income Per Share - Adjusted Post FX
Diluted Net Income Per Share - Adjusted Post FX See important disclosures regarding Non-GAAP measures on pages 2-3 and Non-GAAP reconciliations on pages 63-74. 10-Year CAGR = 13.7%
Slide 59: Long-Term Capital Deployment
Long-Term Capital Deployment $4752 1 2 10-Year ($ in Billions) Acquisitions $6.0 Dividends $0.8 Share Repurchases $0.7 CapEx $0.4 Total Cash Deployed $8.0 Total Cash Generated2 $5.7 1 Includes original purchase price plus subsequent earnout payments 2 Defined as net cash provided by operating activi
Slide 60: Liquidity Profile
Liquidity Profile Maintain low leverage, industry-leading margins, high cash flow conversion and investment-grade ratings Optimize financial flexibility in line with growth objectives Target Net Debt Outstanding to EBITDAC ratio of 0 - 2.5x and Total Debt Outstanding to EBITDAC ratio of 0 - 3.0x Bal
Slide 61: Leverage & Maturity Profile
Leverage & Maturity Profile Debt & Leverage Debt Maturity Profile* ($M) Debt outstanding ($M) Debt to EBITDAC Ratio *All amounts presented on this slide are calculated as of 12/31/2022 See important disclosures regarding Non-GAAP measures on pages 2-3 and Non-GAAP reconciliations on pages 63-74.
Slide 62: Proven Track Record of Industry-Leading Performance
Proven Track Record of Industry-Leading Performance* Free Cash Flow Conversion1 25% 5 Yr. Avg. 24% 10 Yr. Avg. EBITDAC Margin - Adjusted Post FX 31% 5 Yr. Avg. 32% 10 Yr. Avg. Revenue growth 14% 5 Yr. CAGR 12% 10 Yr. CAGR Free Cash Flow growth1 15% 5 Yr. CAGR 15% 10 Yr. CAGR Diluted Net Income Per S
Slide 63: Closing Comments
Closing Comments Closing Comments Business well positioned to continue delivering profitable growth Teammate recruitment and development continues to be a top priority Strong balance sheet and cash generation, as well as access to capital Investing in technology, data and analytics to improve custom
Slide 64: GAAP to Non-GAAP Reconciliation Appendix
GAAP to Non-GAAP Reconciliation Appendix
Slide 65: Reconciliation of Income Before Income Taxes to EBITDAC
Reconciliation Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted Post FX and Income Before Income Taxes Margin to EBITDAC Margin and EBITDAC Margin - Adjusted Post FX 1 “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues See important dis
Slide 66: Reconciliation of Income Before Income Taxes to EBITDAC
See important disclosures regarding Non-GAAP measures on pages 2-3 Reconciliation Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted Post FX and Income Before Income Taxes Margin to EBITDAC Margin and EBITDAC Margin - Adjusted Post FX
Slide 67: Reconciliation of Income Before Income Taxes to EBITDAC
Reconciliation Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted Post FX and Income Before Income Taxes Margin to EBITDAC Margin and EBITDAC Margin - Adjusted Post FX See important disclosures regarding Non-GAAP measures on pages 2-3
Slide 68: Reconciliation of Net Cash from Operations to Free Cash Flow
1 Cash flow for years 2020 and 2021 have been restated under the fiduciary model. Legacy method of cash flows is used for years prior to 2020 2 Reflects acceleration of $50M in annual bonus payments from January 2013 into December 2012; bonuses are traditionally paid in January See important disclos
Slide 69: Reconciliation of Diluted Net Income Per Share
Reconciliation of Diluted Net Income Per Share to Diluted Net Income Per Share - Adjusted Post FX See important disclosures regarding Non-GAAP measures on pages 2-3
Slide 70: Reconciliation of Commissions & Fees to Organic Revenue
Reconciliation of Commissions & Fees to Organic Revenue See important disclosures regarding Non-GAAP measures on pages 2-3 1 The Retail segment includes commissions and fees that are reported in the “Other” column of the segment Information in the Notes to the Consolidated Financial Statements in ou
Slide 71: Reconciliation of Commissions & Fees to Organic Revenue
Reconciliation of Commissions & Fees to Organic Revenue See important disclosures regarding Non-GAAP measures on pages 2-3 1 The Retail segment includes commissions and fees that are reported in the “Other” column of the segment Information in the Notes to the Consolidated Financial Statements in ou
Slide 72: Reconciliation of Commissions & Fees to Organic Revenue
Reconciliation of Commissions & Fees to Organic Revenue See important disclosures regarding Non-GAAP measures on pages 2-3 1 The Retail segment includes commissions and fees that are reported in the “Other” column of the segment Information in the Notes to the Consolidated Financial Statements in ou
Slide 73: Reconciliation of Commissions & Fees to Organic Revenue
Reconciliation of Commissions & Fees to Organic Revenue See important disclosures regarding Non-GAAP measures on pages 2-3 1 The Retail segment includes commissions and fees that are reported in the “Other” column of the segment Information in the Notes to the Consolidated Financial Statements in ou
Slide 74: Reconciliation of Commissions & Fees to Organic Revenue
Reconciliation of Commissions & Fees to Organic Revenue See important disclosures regarding Non-GAAP measures on pages 2-3 1 The Retail segment includes commissions and fees that are reported in the “Other” column of the segment Information in the Notes to the Consolidated Financial Statements in ou
Slide 75: Reconciliation of Long-Term Total Debt to Net Debt Outstanding
Reconciliation of Long-Term Total Debt to Net Debt Outstanding See important disclosures regarding Non-GAAP measures on pages 2-3
Slide 76: The Cheetah
The Cheetah: Since our beginning, we have known that doing what is best for our customers requires constant persistence. The cheetah, which represents vision, swiftness, strength and agility, has served as a symbol for Brown & Brown since the 1980s. For additional information: Andrew Watts Executive