Brown & Brown, Inc. · NYSE:BRO
Brown & Brown — Investor Presentation (March 2024)
70 slides from Brown & Brown's investor presentation, Mar 4, 2024
Slide 1: Company Overview Brown & Brown, Inc. 2024
Company Overview BROWN & BROWN, INC. 2024
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, EBITDAC Margin - Adjusted, Diluted Net Income Per Share - Adjusted, Net Debt, Tot
Slide 4: Information Regarding Non-GAAP Measures - Continued
Information Regarding Non-GAAP Measures - Continued Non-GAAP Earnings Measures EBITDAC is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables. EBITDAC Margin is defined as EBITDAC divided by total revenues. EBITDAC - A
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
2023 Revenue by Segment Historical Revenue & EBITDAC Margin - Adjusted Headquartered in Daytona Beach, Florida Founded in 1939 16,000+ teammates as of December 31, 2023 Doing business throughout the United States, Canada, United Kingdom, Western Europe, Bermuda and Cayman Islands Serving customers v
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?
Successful acquirer Strong balance sheet Entrepreneurial meritocracy Accountable & disciplined High performance Decentralized sales & service Highly talented teammates What Differentiates Brown & Brown? Strong common culture
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 Organic and Acquired Revenue Growth
Sustained Organic and Acquired Revenue Growth Added to the S&P 500 Index in 2021 and the S&P 500 Dividend Aristocrats in 2022 Total Revenues ($) in Billions Special Risk 2020 Revenue $2B The Hays Group 2018 Beecher Carlson 2013 Arrowhead 2012 Revenue $1B 2011 Hull & Co. 2005 Riedman Insurance Agency
Slide 15: Shareholder Value Creation
Investments in people, technology and innovation Share repurchases and dividends Dividend Aristocrat1 – 30 years of consecutive increases Increase capabilities, enhance talent and drive growth 1 Dividend Aristocrat is an S&P measure Acquisitions Returns to Shareholders Shareholder Value Creation Int
Slide 16: Total Shareholder Returns
Total Shareholder Returns1 Total Shareholder Returns 1 Yr. 3 Yr. 5 Yr. 10 Yr. 15 Yr. 20 Yr. BRO 26% 53% 168% 403% 712% 989% Peers2 8% 55% 133% 326% 822% 877% S&P 500 15% 33% 65% 215% 334% 489% Source: CapIQ as of 12/31/2023 1 Calculated as change in share price plus total dividends paid 2 Peers are
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 2023 Avg. 3 Yr. Avg. 5 Yr. Revenue Growth 16.3% 17.4% 17.7% Organic Revenue Growth 7.4% 7.9% 5.9% EBITDAC Margin - Adjusted 30.3% 30.6% 29.7% Drive a culture of accountability, innovation and entrepreneurial thinking Offer a broad range of capabilities, from small
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: Programs Segment
Programs Segment
Slide 23: Programs Segment introduction
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 $6 billion in written premium in the personal, commercial, specialty, professional liability and public entity segments.
Slide 24: Programs Segment Overview
OVERVIEW 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 distribution
Slide 25: Pure Production Model 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: $6B+ Premium, 60+ Programs
$6B+ Premium 60+ Programs Brands
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: 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 29: Wholesale Brokerage Segment
Wholesale Brokerage Segment
Slide 30: 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 31: Wholesale Brokerage Segment Overview
OVERVIEW Wholesale Brokerage Segment Key Metrics 2023 Avg. 3 Yr. Avg. 5 Yr. Revenue Growth 19.4% 15.3% 13.6% Organic Revenue Growth 12.1% 9.2% 8.0% EBITDAC Margin - Adjusted 32.0% 32.1% 32.2% Business Mix Binding Authority Brokerage See important disclosures regarding Non-GAAP measures on pages 2-3
Slide 32: Our Platforms
Our Platforms Binding Authority National & Regional Brokerage International / Lloyds Personal Lines Admitted Market Access
Slide 33: Capabilities and Product Specialization
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 34: Building for Our Future
Product development and vertical practice groups Recruitment and career development Regional U.S. 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 Bui
Slide 35: International Diversification
International Diversification
Slide 36: Our International 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 37: International Diversification
. Approximately 180 International locations Strong retail presence across UK, Ireland & Canada London markets wholesale business - global customer base Cross-class programs capability with geographic distribution (Canada, Europe, U.K., U.S.) Retail: UK, Ireland & Canada, broad capabilities, serving
Slide 38: Diversified Business Footprint
Diversified Business Footprint Focus on combination of Organic Revenue growth and acquisitions Expand geographically while adding new capabilities Target countries with rule of law, stable governments and stable economies Continue disciplined growth strategy Strategic Growth Plan UK Ireland Belgium
Slide 39: The Power of WE
The Power of WE Align Capabilities Enhance Collaboration Operationalize Investments / Scaling Resources
Slide 40: Acquisitions
Acquisitions
Slide 41: Acquisition Strategy
Acquisition Strategy Successful integration of more than 640* acquisitions. *Acquisitions from 1993 through December 31, 2023 Principles Rationale Create long-term shareholder value Find high-quality talent that fits culturally Enhance and expand our capabilities Expand geographic presence Leverage
Slide 42: 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 $164 1 Represen
Slide 43: Technology & Innovation
Technology & Innovation
Slide 44: 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 45: 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 46: Talent
Talent
Slide 47: Our People Strategy
1 Attract Recruit Onboard Engage & Develop Recognize & Reward Retain Perform & Progress Our People Strategy Teammate Lifecycle
Slide 48: Teammate Snapshot
Teammate Snapshot Teammate Resource Groups 16k+ As of December 31, 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 sa
Slide 49: Financial Performance
Financial Performance
Slide 50: Strong Revenue Growth
Strong Revenue Growth Source: FactSet, SNL Financial, Company Filings as of 12/31/2023 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 y
Slide 51: Consistently Strong Margins
Consistently Strong Margins EBITDAC Margin Source: FactSet, SNL Financial, Company Filings as of 12/31/2023 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
Slide 52: Industry-Leading Free Cash Flow Conversion
Industry-Leading Free Cash Flow Conversion Source: FactSet, SNL Financial, Company Filings as of 12/31/2023 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
Slide 53: Long-Term Capital Deployment
Long-Term Capital Deployment 1 2 10-Year ($ in Billions) Acquisitions $6.4 Dividends $0.9 Share Repurchases $0.7 CapEx $0.5 Total Cash Deployed $8.5 Total Cash Generated2 $6.3 1 Includes original purchase price plus subsequent earnout payments 2 Defined as net cash provided by operating activities.
Slide 54: Liquidity Profile
Liquidity Profile Maintain low leverage, industry-leading margins, high cash flow conversion and investment-grade ratings Optimize financial flexibility in line with growth objectives Target net debt outstanding to EBITDAC ratio of 0 - 2.5x and total debt outstanding to EBITDAC ratio of 0 - 3.0x Bal
Slide 55: Leverage & Maturity Profile
Leverage & Maturity Profile Debt & Leverage Debt Maturity Profile* ($M) Debt outstanding ($M) Debt to EBITDAC - Adjusted Ratio *All amounts presented on this slide are calculated as of 12/31/2023 See important disclosures regarding Non-GAAP measures on pages 2-3 and Non-GAAP reconciliations on pages
Slide 56: Proven Track Record of Industry-Leading Performance
Proven Track Record of Industry-Leading Performance* Free Cash Flow Conversion1 24% 5 Yr. Avg. 24% 10 Yr. Avg. EBITDAC Margin - Adjusted 32% 5 Yr. Avg. 32% 10 Yr. Avg. Revenue growth 16% 5 Yr. CAGR 12% 10 Yr. CAGR Free Cash Flow growth1 12% 5 Yr. CAGR 7% 10 Yr. CAGR Diluted Net Income Per Share - Ad
Slide 57: 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 58: GAAP to Non-GAAP Reconciliation Appendix
GAAP to Non-GAAP Reconciliation Appendix
Slide 59: Reconciliation Income Before Income Taxes to EBITDAC
Reconciliation Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted and Income Before Income Taxes Margin to EBITDAC Margin and EBITDAC Margin - Adjusted 1 “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues See important disclosures regardi
Slide 60: Reconciliation 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 and Income Before Income Taxes Margin to EBITDAC Margin and EBITDAC Margin - Adjusted
Slide 61: Reconciliation Income Before Income Taxes to EBITDAC
Reconciliation Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted and Income Before Income Taxes Margin to EBITDAC Margin and EBITDAC Margin - Adjusted See important disclosures regarding Non-GAAP measures on pages 2-3
Slide 62: 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 Equity market capitalization calculated as total shares times the market price per share on the 10th day of the fiscal year See important disclosures regard
Slide 63: Reconciliation of Diluted Net Income Per Share
Reconciliation of Diluted Net Income Per Share to Diluted Net Income Per Share - Adjusted See important disclosures regarding Non-GAAP measures on pages 2-3
Slide 64: 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 65: 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 66: 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 67: 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 68: 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 69: 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 70: 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