Q4 2022 Brown & Brown Inc Earnings Call

January 24, 2023

In the presentation for the call on the Companys website at Www Dot DB insurance dot com by clicking on the investors relations and then calendar of events with that said I will now turn the call over to Powell Brown, President and Chief Executive Officer, you may begin Sir.

Thank you Laura good morning, everyone and thank you for joining us for our fourth quarter 2022 earnings call before we get into the details I wanted to make a few comments regarding our performance in 2020 to.

The fourth quarter capped off another exceptional year as we delivered strong organic growth, while substantially maintaining our margins even with increased variable operating expenses and the financial impact of Hurricane Ian.

2022 was also a milestone for activity acquisition activity as we significantly increased our international capabilities with the additions of <unk>, ERP and BBB and the UK. Our consistently strong results are only made possible through the hard work and dedication of our nearly 15000 teammates now is transition.

Results for the quarter I'm on slide number four.

We delivered $900 million of revenue growing 22% in total and seven 8% organically our adjusted EBIT margin increased by nearly 300 basis points to 31, 4% for the quarter. Adjusted net income per share was <unk> 50, <unk> growing by 28%.

We also completed nine acquisitions during the quarter with annual revenues of approximately $17 million overall, we're pleased with the results for the quarter I'm on slide five.

We achieved another milestone this year by delivering over $3 5 billion of revenue growing 17% in total and 8% organically.

Excuse me.

Our adjusted EBIT margin remained strong for the year at 32, 8% on an adjusted basis, our net income per share increased nearly 7% to $2 28.

Lastly, we had a record year for M&A activity, completing 30 acquisitions with approximately $435 million of annual revenue.

Our acquisitions, both large and small are performing well as a result of our disciplined strategy to acquire top quality businesses that fit culturally and makes sense financially we have a proven track record of being able to successfully acquire integrate and grow companies of all sizes that joined the Brown <unk> Brown team later in the presentation, Andy will discuss our <unk>.

Financial results in more detail.

I'm on slide six.

Let's start with the economy, we continue to see expansion of many businesses that are still hiring, albeit at a slower pace than previous quarters Theres been a general reduction in the number of open positions that companies are looking to fill while interest rates have increased materially over the past year were not seeing broad based impact on our customers of the <unk>.

Economy yet.

From an insurance standpoint, certain markets have been and remain insignificant turmoil pricing for cat property, both commercial and residential was under pressure through the third quarter, then and slammed into Florida. This caused one one reinsurance treaties to be bound at higher attachment points and materially higher rates as a result, we saw him.

Incremental price increases and lower limits being offered for placements in late Q4 of last year and early this year the.

The placement of Cat property in Q4 last year and January of this year with some of the most difficult placements, we've experienced in decades with rates, increasing 20% to 40% or more.

However properties of lesser construction quality or that have experienced losses could be much higher and I mean much higher than this range. As a result, we had customers unable to buy or afford full limits and therefore ended up increasing their deductibles or purchasing loss limit in order to manage their cost of insurance.

In certain cases, this was not possible as lending institutions or condo associations would not allow lower limits are significantly higher deductibles admitted market rate increases were similar to prior quarters and were up 3% to 7% across most lines with the outlier being workers' compensation rates, which remain down 1% to three <unk>.

<unk>.

The placement of professional liability and excess liability remained competitive with rates down 5% up 5% with public company D&O rates down five to down 20 or more regarding cyber. The story is similar to the last few quarters with rates and deductibles continuing to increase but we did see some slight moderation.

During the quarter.

Late in Q4, there were reforms impacting the legal and regulatory environment for insurance in the state of Florida, which included the elimination of one way attorney fees and assignment of benefit.

Establishment of a reinsurance backstop for certain carriers and the requirement of arbitration prior to litigation. These changes should be positive for buyers of insurance, but it will take time.

From an M&A standpoint, we're pleased with the nine transactions. We completed we continue to acquire companies that fit culturally and makes sense financially specifically the integration of <unk> is going very well and we are acquiring a number of businesses and the financial performance.

Is in line with our expectations.

From an overall industry perspective, the number of transactions slowed materially compared to previous quarters.

Last quarter, if a business is considered to be a platform or a must have the market is still aggressive on pricing.

Now Im on slide five let's transition I'm, sorry, slide seven let's transition to <unk>.

And discuss our performance of the four segments for the quarter, our retail segment delivered organic growth of two 7% with good growth experienced in most lines of business.

Our organic growth was impacted by the slowdown in specialty lines due to lower auto and RV sales as well as slower growth in a couple of our employee benefits businesses due to an extremely tough comparable versus the fourth quarter in the prior year.

Our retail segment delivered another strong year of organic growth.

Revenue growth of six 5%.

We're very pleased with how our business is positioned and the capabilities. We have to serve our customers of any size and believe 2023 should be another good year.

Once again, our National program segment delivered excellent results growing 22% organically for the quarter. This performance was driven by good new business and retention across most of our programs as well as exposure unit expansion and rate increases the national programs team is performing at a high level by offering a diverse range of products and delivering.

Best in class solutions for our customers driving nearly 16% organic growth for the full year.

Our wholesale brokerage segment delivered another good quarter growing 8% organically driven by rate increases and new business, even with personal lines, which has been a challenge for most of the year.

Our wholesale brokerage segment grew seven 6% organically for 2022 and is well positioned to continue their success into 'twenty three.

For the quarter, our services segment delivered modest organic revenue growth as a result of winning new customers and increased storms claims with this expansion is substantially offset by lower claims for certain businesses. Overall, we feel good about our capabilities and the value we deliver for our customers now let me turn it over to Andy to discuss our financial performance in more.

Detail great. Thank you Paul and good morning, everybody. We are over on slide number eight like previous quarters, we will discuss our GAAP results and certain non-GAAP financial highlights for the fourth quarter. We delivered 22, 1% total revenue growth organic revenue growth of seven 8% and our.

Yes.

<unk> margin increased by 220 basis points are.

Our net income grew 43% and diluted net income per share increased by 42% to 51.

Both were impacted by the change in estimated acquisition earn out payables, which was a credit of $5 8 million in 2022, and a charge of $19 8 million in the prior year.

Effective tax rate decreased to.

225, 2% for the fourth quarter of this year as compared to 27, 8% in the fourth quarter of last year, primarily driven by lower statutory rates for our international businesses and the impact of deductibility for acquisition earn out payable adjustments our weighted average number of shares with substantially full.

That compared to the prior year and our dividends per share for the quarter increased to 11 five.

Or 11, 7% compared to the fourth quarter of 2021.

We're over on slide number nine this slide presents our results on an adjusted basis, which excludes the impact of movements in foreign currencies on both revenues and expenses.

The net gain or loss on disposals, the onetime acquisition and integration costs associated with GE, ERP orchid and BBB and the change in earn out payables. We've included on slides 18 through 26 reconciliations to the most comparable GAAP measures on an adjusted basis, our EBITDA margin grew by 200 new.

90 basis points versus the prior year.

EBIT increased by 34, 9% and income before income taxes increased by 22, 6%. This.

This margin expansion was due to another solid quarter of revenue growth increased contingent incentive commissions and leveraging our expense base, even while having a higher year over year variable operating cost.

The incremental growth rate of adjusted EBITDA as compared to adjusted income before income taxes was driven by higher year over year interest cost of $29 million and higher amortization of $7 million with both largely driven by the GOP working and <unk> acquisitions, our adjusted net income for the quarter increased by 20%.

Six 9% and adjusted diluted net income per share was <unk> 50 incur.

Increasing 28, 2% overall.

Over on slide number 10.

Our retail segment delivered adjusted total revenue growth of 19, 8% driven primarily by acquisition activity and organic revenue growth of two 7% for the quarter.

Adjusted EBITDA grew 25, 1% with our adjusted EBITDA margin, increasing by 120 basis points for the quarter, primarily driven by lower year over year performance incentives, but was partially offset by higher variable operating cost.

We're on slide number 11, our national programs segment delivered adjusted total revenue growth of 34, 1% driven by organic revenue growth of 21, 9% acquisition.

<unk> activity and higher contingent commissions.

Organic growth was positively impacted by approximately $7 million due to the finalization of a growth bonus for one of our programs, which we do not anticipate recurring in 2023.

As it relates to flood claims processing revenues associated with Hurricanes, and we still expect revenues in the range of $12 million to $15 million in the fourth quarter, we recognized approximately $8 million, our contingent commissions were higher due to premium growth and profitable underwriting and our cat programs as.

Well as the loss development for hurricane in being lower than originally expected.

Adjusted EBIT grew by 53% over the prior year and our adjusted margin increased by 540 basis points to 44, 1%, primarily due to total revenue growth and leveraging our expense base as well as higher contingent commissions and the previously mentioned growth bonus we're on slide number 12.

Our wholesale brokerage segment delivered adjusted total revenue growth of 17, 1% driven by recent acquisitions, good organic revenue growth of eight 1% and an increase in contingent commissions adjusted EBITDAX increased by 19, 9% with the associated margin growing by 70 basis.

<unk>, which is primarily impacted by increased contingent commissions and good organic growth, but was partially offset by higher variable operating expenses.

Slide number 13, adjusted total revenues and organic revenue growth in our services segment were substantially in line with the prior year for the quarter adjusted EBITDAX increased $1 6 million or 23, 9% driven by continued management of our expenses.

On slide number 14.

This slide represents our GAAP results for both years in 2022, we delivered revenues of over $3 5 billion.

Growing 17, 1% and earnings per share of $2 37.

Growing 14, 5%.

EBITDAX increased by 14% to approximately $1 2 billion for the year, our share count will substantially flat and our dividends paid during 2022 increased by 11, 3%.

We're on slide number 15.

This slide presents our results for both years on an adjusted basis. Our income before income taxes grew six 6% and net income per share was $2 and 28 <unk>.

Growing by six 5% as compared to total revenue growth of 17, 3%. This difference was driven by higher interest and amortization associated with ERP orchid and BBB. Our adjusted EBITDA margin remained strong at 32, 8%, but declined slightly by 40 basis points from the prior year.

The higher variable cost overall, we are very pleased with the results for 2022.

On slide number 16 as part of evaluating the performance for the year and the fact that our captives are newer wanted to provide some additional color.

We participate in to cat property captives with the goals to increase capacity drive additional organic growth.

Participate in strong underwriting results likely do like we do with contingent commissions and deliver good returns on our invested capital.

One captive participates on a quota share basis for certain of our wind and quake programs in the second participates on an excess of loss or reinsurance layer for our personal lines wind program.

Overall, we are very pleased with the top and bottom line performance knowing that certain quarters can have volatility when there are cat events. It is important to keep in mind that performance cannot be evaluated on one quarter, but is better viewed on a full year basis.

In 2022, we recognized approximately $25 million of incremental revenue with about $5 million driven by the acquisition of <unk> for 2023, we anticipate revenues of approximately $30 million to $35 million from a risk standpoint for both captives, we can have up to 13 million.

<unk> of exposure in any one occurrence and $25 million in the aggregate as we always do we've used a disciplined approach to balanced upside potential and downside risk versus deployed capital and believe we have structured the program as well to deliver on our objectives.

A few comments regarding liquidity and cash conversion for 2022, we delivered cash flow from operations of $881 million our ratio of cash flow from operations as a percentage of total revenues was 24, 7% as compared to 26, 5% last year. This lower ratio was due to the payment of earn outs as <unk>.

Acquisitions at over performed our original expectations.

Incremental interest expense and paying higher incentive bonuses to our teammates for their outstanding performance. In 2021 overall, we are in a strong cash generation and capital position, finishing the year with $650 million of available cash.

We also repaid the remaining outstanding balance of $150 million on our revolver that was drawn in connection with our acquisition of <unk> ERP BTB, an orchid, we expect to continue to delever over the coming quarters as we have done in the past posted larger deployments of capital. We finished the year in a strong liquidity position.

With this capital the cash we will generate in 2023 as well as capacity on our revolver. We are well positioned to fund continued investments in our company.

We have a few comments regarding outlook for 2023.

First for contingent commissions, we anticipate them to be relatively flat year over year, but this will be ultimately driven by loss experience as it pertains to taxes, we expect our effective tax rate to be in the range of 24% to 25% a slight increase compared to 2022 due to a higher estimated tax rate in the UK.

The lower year over year tax benefit from the vesting of stock grants and limitations on the deductibility of certain compensation benefits.

We anticipate our interest expense will be in the range of $185 million to $195 million.

Interest income, we're seeing some nice improvement and are projecting income of approximately $14 million to $17 million subject to how the fed changes interest rates.

As it relates to amortization expense, we are projecting approximately $162 million to $166 million. This does not include amortization associated with acquisitions that we may complete during 2023.

As it relates to margins, we do not see any major headwinds or tailwind heading into 2023 that should materially impact our margins with that let me turn it back over to Powell for closing comments.

Thanks, Andy for a great report as we closeout 'twenty two and look forward to 'twenty three we have a couple of observations first last year was another very successful year for Brown <unk> Brown, we delivered over $3 5 billion of revenues growing 17% had our largest year of acquisitions, while expanding our footprint and.

Abilities in the U K market, we invested in technology.

To help improve the experience for our customers and teammates grew organically at over 8% delivered strong margins again, even with higher variable costs and the impacts of hurricane Ian as well as generated over $880 million of cash flow from operations. We're also in a strong position from a capital standpoint.

And we'll continue to invest in our capabilities in order to best serve the needs of our customers.

Guarding the economic outlook of 2023, while theres not theres a lot of uncertainty regarding inflation and labor shortages. We expect further economic moderation as the impact of higher interest rates take effect from an insurance standpoint were anticipating admitted market rate increases to be relatively consistent with last year.

We expect cat property rates to be up 10% to 40% or more for at least the first half of the year as well as capacity to potentially be constrained.

Potentially it will be constrained at the market needs to fully digest and impact.

The impact of Hurricane <unk> as well as other insured losses. In addition professional liability rates should continue to moderate downward rigor.

Regarding recent acquisitions, they are performing well and we're experiencing it we're expecting good profitable growth and coming in the coming year.

On an M&A front, we have a good pipeline and will continue our disciplined approach to finding great companies that fit culturally and make sense financially.

In summary, we feel great about our business the diversity of our capabilities and our ability to help customers with risk management solutions that best fit their needs. Our team of almost 15000 has good momentum and we're looking forward to another strong year.

With that let me turn it back over to norm for the Q&A session.

Thank you.

As a reminder to ask a question you will need to press star one one on your telephone to withdraw your question. Please press star one again, please wait for your name to be announced please standby, while we compile the Q&A roster.

One moment, Sir your first question.

And our first question comes from Greg Peters with Raymond James Your line is now open Sir.

Great Good morning, everyone.

I know you don't like to.

Forecast organic revenue growth, but.

There are two items, one you called out.

Your commentary about catastrophe pricing and secondly in your retail segment.

You talked about some employee benefit headwinds.

The difficult comparison, so when I think about 23, Paul and Andy.

How will those variables.

The June 1st renewals on property cat and what's going on in employee benefits, how will that affect your organic results for this year this upcoming year.

Okay, let's start with the second part first let's talk about employee benefits.

Employee benefits.

Overall performed really well for the year and we're very pleased with those businesses.

And as we said in our prepared remarks that was actually really only in one or two businesses that had.

A setback.

Having said that I think that EV will continue to perform well in the system.

We don't give organic guidance on that and we don't break out lines of business, but and from an employee benefit standpoint feel really good.

As it relates to the cat property pricing the variable there Greg as you know is not.

As much or I mean, it is there are certain limitations on our ability to present limits in some instances, but it's more of in my opinion, it's more of an affordability issue and so if you think about if you have been giving rate increases, let's just say to yourself on your own.

Personal lines homeowners, if you've got an increase of let's say, 10% a year for four or five years in a row and then all of a sudden we came on the fifth year and gave you a 25% increase.

There is.

The buyers are tiring of that.

And so having said that.

Availability of capacity and.

This market is unlike anything I've ever seen I've only been in the insurance industry for 33 years now so.

There is a lot more to go but.

Im not ever seen anything like this.

And.

We will continue to provide solutions to our customers, but sometimes the.

The example, I think we used last time and I'll use. It again is if you have a.

An entity and they're paying $800000 for their property and.

The renewal is a million eight.

And they say what can we buy for $1 million, which can't buy any more insurance, we can't afford it.

So we're seeing that more and more Greg so the cat the cat pricing.

That is going to is it more of a wildcard the other thing we're seeing is.

In the.

Cat capacity in.

Accessing it in some instances.

There are there is commission pressure downward on some of those placements now so a lot of people just think well if the rate goes up X than.

Youre going to your Commission goes up Act if you're on commission as opposed to a fee and that is true sometimes but in this case they might cut your commission, one or two points and so we're seeing that as well so thats a harder one to answer Greg.

Okay, I understand that it's a moving target, especially.

In the southeast.

I guess for my second question just pivot Andy.

Andy in your in your comments.

You talked about.

Yeah.

You gave some guidance on adjusted EBITDA margins, you said, no tailwind or headwinds for for 2003. So maybe you can provide some context about is that it.

In terms of laying out expectations for the street is it is it just.

We expect margins to be flat year over year or maybe.

Give us some color to help us frame, what your comments really mean.

Sure.

What we're trying to say on that one Greg is we don't see any major headwinds or tailwind going into the year.

We do have like most everybody else unknowns around what will happen with inflation in <unk>.

Work, our way through those pieces don't see any major incremental investments that we're making the business that we need to call out externally, we're always making investments in our business, but we do that each year through everything we do anticipate that <unk> will be up year over year, just not to the extent that what we saw a 22 versus.

<unk> versus 'twenty, one right now so and that was really why we gave guidance going into 2022, because that was a big variable, but right now we're not seeing anything specific that would impact the margins in 'twenty three versus 22.

And just to.

Follow up on that when you think about organic for 'twenty three.

Is there some sort of a rule of thumb I know some of your peers offer roll from that of organic certain amount. We can expand margins. If organic is not I mean do you have any sort of metric that you are thinking about in terms of organic as its impact on margins.

No.

Fair enough. Thanks for your answers.

Thanks, Greg Thank you.

One moment for our next question.

And our next question comes from Rob Cox with Goldman Sachs. Your line is now open.

Hey, Thanks for taking my question.

With respect to.

Retail you called out a couple of headwinds I was wondering specifically.

Group benefits, if the tough comp.

Was created by a true up of exposure expectations and the prior year quarter or Marceau bye.

A deceleration in growth this quarter.

No Robert maybe the way to think about it is we had we had a few businesses last year that just had absolutely outsized performance.

In the fourth quarter.

One of them was a newer businesses was starting so as in it was in growth mode.

So thats what makes the year over year comparison in the fourth quarter difficult, but as Paul mentioned in his comments, we feel really good about how our businesses are positioned and how they perform for 2022.

Don't read more into that into the fourth quarter. There is no reason to.

Got it. Thank you that's helpful and.

And maybe just.

Moving on to some of the Florida Legislative changes.

Any comments on what you think the impact of those might be for Brown <unk> Brown in the near term and then perhaps longer term.

So Rob.

First of all we think that.

Based upon everything we see they are positive for the operating environment for risk bearers and for insurance in the state of Florida, I'd like to point out that we anticipate that the trial bar will challenge those so I don't think those go go in.

Place easily.

So I don't know what that means relative to timing and adoption.

Relative to.

The marketplace, what our governor and the state of Florida is trying to do fundamentally is create a one viable to competitive three sustainable.

Place and the state of Florida is not really want to be so called in the insurance business.

But with this disruption they will have to be bigger in the insurance business for the next several years. So I believe we believe.

That the.

This is a multi year transition to bring in the Florida marketplace, specifically personal lines in Florida back to that kind of environment. So it'll probably take three to five years to have some additional participation by the state of Florida.

I E. What they're proposing in this and it may need more going forward, but it is not the intent of the governor.

To expand their participation I E as being a state risk there so.

It's hard to tell because you've got challenges ahead, you've got other things, but what we really were.

Want and need in the state of Florida is.

Relatively affordable homeowners prices for all sized homes.

With a coverage a home of 200000 versus one that's over a $1 million and everything in between and so.

There's a lot of disruption across those.

All of those sizes.

Got it thanks, and maybe just lastly could you quantify the annual growth bonus and national programs, and maybe specifically to programs, where you see contingents going in 2023.

So I think I think Rob has two pieces inside there. So one of the things we talked about on the growth of bonus.

That was about $7 million and as of right now we don't see that recurring in 2023.

And again that is inside of the organic calculation not in contingent commissions and then we didn't give guidance on contingents by the individual segments. Mark comment was just overall for the company that.

At least as of right now see them relatively flat in 2023, but again all depends upon loss experienced during the year and overall growth and profitability.

Thank you.

Sure.

Thank you.

One moment for our next question.

Our next question comes from Western Bloomer with UBS. Your line is now open.

Hi, Thanks for taking my questions first one just to follow up on the employee benefits comment can you just remind us of the seasonality of that business and do you expect there to be any material headwinds in the first quarter as well.

Hey, good morning Western.

The <unk> business does have some seasonality to it and it's generally a little bit if you look across the quarters first normally its a little bit more weighted to Q1 and thats just because of the way in which revenue is recognized in that business.

And then you normally see at the fourth quarter is normally one of the lower that should kind of just natural how that business.

Participates.

From at least the.

Some of the headwinds and what we've talked about in the fourth quarter. Some of those may carryover into Q1, but.

Don't see any issues on a full year basis similar to our comments about how we thought about the business for 2022.

Got it. Thank you and then kind of similar type of question within professional lines I know you highlighted.

A slowdown in D&O pricing is there any seasonality or how should we think about the impact of lower rates in that business, both in retail and wholesale.

So the way I would just look at it is.

If you think about.

In an environment, which has had rate pressure up for the last several years.

And in some cases dramatically more than the public markets.

Theyre coming down substantially because it's a very competitive environment and one might speculate western that people that are reducing their catastrophic property exposure would want to write business elsewhere, and where might they do it and they might say in casualty our professional lines.

So I think it's important to think of that as as.

Headwind slight but a headwind on that segment of our businesses because.

I think it will be down and in some instances down.

Good bit.

Great. Thank you and then last one just on the margin I know you highlighted no material headwinds or tailwind getting too granular here, but is the March 'twenty two M&A that came at a higher overall margin does that business still running higher overall relative to kind of the core Brown <unk> Brown.

When you say the March do you have the margin in the.

The margin guidance that you gave for the <unk>.

Fine.

As you have the all the businesses are performing in line with our expectations, we talked a little bit about some of the seasonality during the earnings call last quarter, but.

They are all kind of right in line with what we expected.

Great. Thanks for taking my questions. Thank you.

Thank you.

One moment for our next question.

And our next question comes from Elyse Greenspan with Wells Fargo. Your line is now open.

Hi, Thanks.

Good morning.

My first question.

And the contingent commissions, Andy I know you guys had that lender place contingency that you didn't you weren't sure that they would recur next year does that does that assume that they come back or what are you assuming for the lender placed program.

Yes, so one of the items that we saw in the third during the fourth quarter.

As we did recognize about three or $4 million that we had anticipated we would not recognize in the fourth quarter. So if you remember back to the call. We said we had backed out to the third quarter call, we had backed up $15 million year to date.

Instead, we probably would.

Therefore, not recorded in the fourth quarter development was not at the extent that we anticipated at that state which is positive.

So we recognize those three to four and then as we look to 2023.

We would anticipate earning some in 'twenty three not back to kind of normal levels. Because there is still carryover in the calculation, but we've taken that into consideration when we've given guidance at a total level for the company of substantially flat.

Okay, and then the interest income right I know in the past you guys had said maybe fiduciary income wouldn't be that big but it sounds like you're assuming a little bit of a pick up there right you guys said $14 million to $17 million wouldn't that be accretive to your margins in 'twenty three.

<unk>.

Yes, if you look at it by itself that would be a true statement it would be accretive to margins.

So I guess theoretically maybe the interest income as a tailwind and that's getting offset by something else because it sounds like youre, saying no headwind tailwind is maybe flat margins overall, but it does feel like that number in isolation would be would be a tailwind to the coming year.

Yes, again, I think isolation I think that's probably fair lease, but there is within.

Within our business like most businesses, but at least we'll talk to our specifically theres always a lot of moving parts.

You've always got things move kind of moving back and forth and that was really why we're trying to give guidance about any major tailwind or headwinds that are out there.

And then one last one the employee benefits you guys said is concentrated in the first part of the year, but it does sound like what happened in the fourth quarter was maybe just.

Just a really tough comp with last year or so.

When we think about <unk> I know you don't like to give guidance, but is there anything that stands out to start the year that would make.

The first part of 'twenty, we have tougher comps in the back part of the year.

Nothing to add a top level I think to a western earlier question is will there be potentially a little bit of headwind in the first quarter.

From what we saw in the fourth quarter, a little bit, but we feel really good about our business and how its position and the capabilities that we have serve customers of all sizes in that business.

Feel like we will perform well during 2023.

Okay. Thanks for the color.

Great. Thank you. Thanks Elyse. Thank you one moment for our next question.

Yeah.

And our next question comes from Michael Zaremski with BMO capital markets. Your line is now open.

Yes.

Hey, good morning.

Maybe focusing back on the.

This location in the parts of the property market I'm, just curious at a high level. If your view has changed and whether this is whether.

Whether the environment is kind of a net benefit to growth or margins or net neutral or maybe even that negatively in others a lot of moving parts clearly.

You came out and talked a little bit better about some commission pressures.

Or are moving moving materially higher so just kind of curious if you see that all the moving parts net net is.

As a wash potentially your view has changed.

Yeah, No I would say.

Michael it's probably.

A net positive, but slight net net positive and the reason I say hedge with a slight is because.

<unk>.

The changes that we cant see in the market yet.

E <unk>.

Limits for limits being reduced by carriers or some potential for.

Any commission pressures or anything of that nature.

But.

And basically also clients just basically raising their hand, and saying look uncle and I know that's tough, but it's true because we are the deliver of bad news.

When it comes like this so it'll be I think.

It will be slightly positive is how I would want you to think about that.

Yeah.

Okay.

Helpful and maybe switching gears to <unk>.

Inflationary impacts on.

On the income statement.

<unk>.

I think.

There was a comment made about some unknowns on inflation and T&D.

When I think about that.

<unk>.

Commission model I think of it kind of be somewhat.

More insulated from.

Wage pressures due to that kind of how how the frontline salespeople are paid but maybe I'm wrong and maybe you can just kind of elaborate on.

Bye.

<unk> and inflation.

So, let's let's talk about your comment around.

Wage pressure, we're not immune to wage pressure and I think thats, a very important thing and one of the things that.

We find just like anybody else out there in our space as the war on talent is very competitive and people are looking for people not just sales people, but they could be service people our marketing people are administrative.

People that administer claims or things like that so it's a very competitive marketplace. So I don't want you to think that we're immune to that because we are far from that that's number one number two when we say TNA pressure, it's not as though we think theres going to be so much that much more <unk>.

Travel and entertainment, we think that the if you do the same there is just significant pressure on let's just say an airplane ticket.

Or a hotel depending on where you are going and so that's where we're seeing that pressure and so on.

Our business is not unlike many of the other businesses that you know are follow or all of the above.

It is an inflationary environment the pressure here.

Though it is high is not as high as it is in England and in Ireland that wage pressure seems to be higher there.

But we're working through that as well.

So.

That's kind of what we mean by that Michael.

That's helpful and just maybe just sneaking one quick one in any.

Impact from the.

Flooding in California.

Sure.

Program that administer.

Could be material.

No.

We havent seen anything interestingly enough in California.

As you know they don't get a lot of rain to begin with and so when they do get a lot of rain. They get significant flooding and there are not a lot of people that buy flood insurance in the state of California.

So.

It's no we don't we don't see that.

Thank you.

Thank you. Thank you one moment for our next question.

And our next question comes from Iran.

<unk> with Jefferies. Your line is now open.

Hi, good morning, everybody and thanks for answering my questions.

I guess my first question and I think it maybe ties back a couple of other questions you've already received.

As you think about the property cat rate environment, where do you see maybe which segments do you think would benefit most of them, which ones would you see maybe facing greater pressure from.

The various components, you talked about kind of reduced commissions, maybe more difficult.

<unk>, placing business.

I want to make sure I understand that Youre on can you just.

Repeat the question or elaborate a little bit you are saying what do you think becomes more difficult and then what becomes easier as did I hear that correctly.

I'm asking of the four segments that you have or I guess really three retail national programs and wholesale which do you think would benefit more than which would maybe face greater pressure.

Okay. So.

First off I would say that.

The I look at it a little differently than benefit more or.

Or not you didn't use this term or suffer more maybe.

For that let's look at retail for a moment retail.

Has the good fortune, we deal directly with the customer so youre going to have a lot of.

Heavy lifting relative to delivering.

Those.

Particular increases and you may have.

As I said you might have commission.

Commission reductions in some instances, but rate's going to go up and I'd say that it's mark.

Mildly positive relative to oil.

Organic growth in that business and wholesale it makes their jobs property brokers significantly.

More difficult and trying to fill out lines of.

Business. So if you had $100 million line and it was handled by one or two markets and then now.

That market. It took 80% of it is pulling back or cutting their participation you got to put six or seven markets and to get to your $100 million.

That said.

There will continue to be.

Pressure there as well.

And I think that there is more the most conflict if you want to call. It that in placements will be in retail and wholesale and national programs, It's a matter of cat capacity availability.

So as you know there are a number of carriers out there who have allowed their capacity to be underwritten.

By a number of different type of MGH and MGE use in a number of those were not profitable not just last year, but over many years before.

So there is what we consider a flight to quality.

And in the sense of our underwriting facilities, we're very pleased with the results that we've delivered prior to.

Gives me last year, and including last year with the losses and Ian Nicole So.

I would say that in in programs. It's a different thing there their growth potential is limited by availability. It is not a conflict of.

And the other two there is the hand to hand combat of getting people to actually put limits up and do it in the in the underwriting facilities, we have that authority and we can do what we can do but we're limited by the capacity. So if in fact.

A market or market decides to cut back on their capacity they give to us that will impact our ability to grow and Conversely, if they decide to change their commission level.

And that would impact our ability to grow the one thing that I do want to mention.

I think it's important for everybody to think about this.

Yeah.

Things are never as good as they seem or as bad as they've seen and what I mean by that is even though the cat market is.

Very challenged right now there will be a time in the future where it improves now I'm not foreshadowing something because we don't have a crystal ball that doesn't mean 12 months from now we're going to have X or y or Z, that's not what I'm, saying, but there are certain markets that are approaching it.

In a way that.

They are looking very opportunistically at it.

And then there are other markets that are looking at it like a long term partnership.

Obviously, we would prefer the latter as opposed to the former but we're out looking for capacity globally.

So I just want everybody to kind of know that.

This pressure too will pass at some point.

Thank you that's helpful color, if I could switch gears to M&A for a second.

So I think you had said that the pipeline remains robust that said you are seeing M&A activity slowing is that just a function of a bid ask spread that is too wide or are there other drivers there.

No no no I think and.

When you say the M&A activity is slowing remember we're talking about the industry. So as you know private equity has been a very big participant in the number of private equity announced transactions in Q4 was down substantially over the prior quarters <unk> Q4 of the prior year.

I think that there is this interesting sort of.

We're kind of at this unusual clash point, if you want to call. It that which is the market with increased interest rates and buyers would like to see a slight decrease in multiples paid.

And yet there are businesses some of which are owned by private equity that would like to monetize.

They're businesses at what were historic levels or multiples in anticipation of other opportunities for them.

Or maybe better said, maybe they think that they think there'll be pressure on multiples going forward. So they want to get out at a higher multiple if possible then they might think of in a year from now I'm just using that as an example, so I think we're going to see a lot of activity.

In the next 12 months.

The good part about our business is we're focused on the long term and long term to us is not one year or three years, it's a very long time and so.

We're looking for businesses that fit culturally and makes sense financially and we believe there will be those businesses out there, but in the interim period as Andy said, we're aggressively paying down our debt we are investing in teammates.

And focus on growing our business organically.

Thank you very much thank.

Thank you thank.

Thank you one moment for our next question.

Yes.

And our next question comes from Mark Hughes with <unk>. Your line is now open.

Yes, Thank you and good morning.

Morning.

You had talked.

A good amount about.

Your quest for capacity did you find any restrictions have you seen with.

Our reinsurance market any cutback on your programs in here thinking about.

Who are the or quake for instance.

Anything that.

It is noteworthy that could perhaps impact organic growth.

Yes so.

Thanks for the question.

That is somewhat of a moving target, but at the present time.

We think.

A good outcome is flat in terms of no reduction in capacity.

We may have certain entity.

Entities or businesses, where they would maybe be trading some capacity or debt net down on a net basis just slightly.

But right now we think its pretty neutral and.

From our vantage point, we view that as a win so I'm not aware of something and you specifically asked about flutter quake, but that could involve our wind facilities as well.

But the thing that we talked about last year and we've talked about in prior years, but it's even more magnified this year our growth opportunities.

And national programs will be directly not exclusively but directly linked to the amount of new capacity that we're able to secure.

And so if in fact, we're not able to.

Procure any new capacity, that's going to be a slight limitation on the organic growth that does not mean that we can grow organically. It just means that we will grow more organically. If we are able to secure more capacity, which we're looking at globally.

Understood and then on the captive you are making some of the economics, there, 30% to $35 million in revenue, but you've got loss retention of $13 million.

Per event, one would think you would need a pretty high margin on that revenue in order to.

We feel good about generating a return over multiple years, if you've got the clinical data.

About that properly.

Well I'm going to I'm going to I'm going to answer your question twofold.

One I want you to think about what a captive is there's really three parts to the captive.

There is the loss the retention amount that you retain on any one loss that just losses.

Number two which is the reinstatement premium which means you put the program back in place for a subsequent event and the third would be if you had any profit in that period of time in that captive prior to them being distributed.

And so what I would tell you is that we are very mindful of the way, we invest our capital and we're looking for returns that help us grow the business.

So what I would tell you is if we did not think that those were reasonable long term investments, we would not make them and in the event that the economics turn against us, meaning cost inputs or things make them not viable then we just won't do them.

Hey, Mark just a question for you if you can expand on something when you said.

You talked about providing adequate returns how do you.

Walk us through how you mean that because I guess I think were were made.

Not seeing it the same way you are but.

If you see I think.

We're obtaining third youre pointing.

Yes.

You're generating $30 million in revenue.

So you have a 50% margin.

$15 million, but if your retention per event that $13 million.

And maybe a hurricane hit Florida, one out of three years.

And that influences that.

The economics.

Just real simple math, but I was thinking about.

Hey.

They're probably lies the opportunity to clarify on the some more.

Here's the way we want everybody to try to think about these as what we're doing is we're participating in the underwriting profits.

On these captives what do we do on contingent commissions, we participate in the underwriting profits. So this is not where theyre coming in and we're paying commissions and everything else on the business. So I think thats part of just the piece that maybe youre thinking about it.

It's traditional call it operating profit, it's coming through as well.

She may its normal operating profit versus underwriting profit.

Sure.

So we're very very pleased with the performance this year into Powerpoint, we wouldn't put our capital into these if we didn't think that we can get an appropriate return.

And the $13 million Mark is up to that doesn't mean it would be 13, Mel equally. So there is a very important distinction it can be less than that or substantially less than that.

I appreciate the clarity thank you thank.

Thank you.

Thank you one moment for our next question.

Our next question comes from Michael Ward with Citi. Your line is now open.

Thank you guys good morning.

One last one maybe I was wondering if you could share any color on the profit commissions and programs and if any of any of that was related to maybe hurt hurricane in true ups.

Good morning, Mike Sandy here is the wouldn't say anything that was related to hurricane Ian true ups right. What we did at the end of the third quarter as we had backed off the $15 million as we mentioned earlier and we had also at that point said based upon what we thought.

Losses were going to be we would not record $3 million to $4 million and one of our programs that development did not come in at the anticipated level, which is again that's a positive thing. Therefore, we did go ahead and record that three or $4 million in the fourth quarter.

All of the other contingency that we recorded in the fourth quarter that was all based upon the profitable growth that we delivered for our carrier partners and just we do year end calculations and sometimes.

You can make it sometimes you don't that's why we see generally the most volatility in our national programs. They just they move back and forth.

Super helpful. Thank you maybe one last quick one just on the pressure in specialty.

As I think you called out auto lower auto and RV sales.

Is there anything else there that we should be thinking about.

No I don't think so I mean remember.

If you think out a little bit sort of speculate on the outlook on that industry, I think probably inventory levels will probably lift a little in the third quarter and beyond in the year.

Also in light of the economic environment that will probably be some more incentives I don't know that but incentives put in place to move.

Units.

So if the inventory is there and I use the most important thing is I can't we can't fully predict that we think youre going to see some uptick in that but slight.

Okay. Thanks, very much guys.

We will take one more question normally that'd be great.

Thank you.

Our next question.

It comes from the line of Derek <unk> with <unk>. Your line is now open.

Good morning. Thank you just had a question on the programs business.

Thank you previously talked about your expectation for programs organic growth to kind of moderate.

Even excluding the $7 million that you called out organic growth was really strong and it actually accelerated sequentially. So can you just give us some more color on what kind of drove that performance relative to your internal expectations.

Yeah. So one of the other items in there and we talked about it was we.

We delivered $25 million of revenue from the captives and about $5 million of that came through the <unk> acquisition. So.

The remainder of that being on the organic side, we're going to see continued growth in 2003, but not at that same level Eric.

Got it Okay. That's helpful. And then just one quick one.

I know that the <unk>.

European PDP integration is going well can you just give us some color on your European economic outlook.

We anticipate an impact on the organic growth for this business.

Please.

Sure so.

Remember <unk> ERP is.

England and Ireland, both Republic of Ireland, and we have business is already in the Republic of Ireland, and Northern Ireland and BBB, we do business in.

Excuse me, Italy, meaning we are the largest producer of Italian business into Lloyd's.

That's over 50% of that business and then we do business in France, and in Belgium, and we also do business, obviously in England into the London marketplace. So what I would tell you is that in.

In England, it's not dissimilar to here.

Which you see a lot of.

Pressure on.

Wages and cost of living I E fuel oil and things like that.

And so but from a comp from a customer standpoint, we have not yet seen a significant downdraft on their buying habits. So what I would tell you is we think that.

The economy seems to be moving along.

Find way there as it relates to.

Our exposure, although it would be it's much smaller than western Europe , we're not seeing any other unusual trends either remember Lloyd's is a big market globally, and I think about 50% of their premium writings or in the United States, but the other 50 are worldwide and.

So we're continuing to have nice growth inside of our.

Our Lloyd's brokers, which we have now three.

And so we're very pleased that deck is lawnmower and BBB.

Okay. Thank you.

Right.

Thank you.

Im showing no further questions I'd like to hand, the conference back to Mr. Paul for any closing remarks.

Thanks Norma. Thank you all very much. We appreciate your time and energy we thought last year was a really good year and we're excited about the future I think my final comment would be this.

As it relates to trends, we don't think that trend is one quarter and we don't measure the outcomes of a business over a quarter, we look at years and multiple years and so as it relates to each of our three largest segments. We feel good about going into next year there are some.

<unk> I E because of market constraints and economic constraints, but we're going to work our way through those so we look forward to talking to you next quarter and have a nice day. Thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

The conference will begin shortly to raise and lower Johan during Q&A you can dial one one.

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Good morning, and welcome to the Brown <unk> Brown incorporated fourth quarter earnings Conference call. Today's call is being recorded. Please note that certain information discussed during this call including information contained in the slide presentation posted in the <unk>.

With this call and including answers given in response to your questions may relate to future results and events or otherwise be forward looking in nature.

Such statements reflect their current views with respect to future events, including those relating to the company's anticipated financial results for the fourth quarter and are intended to fall within the safe Harbor provisions of the securities laws.

Actual results or events in the future are subject to a number of risks and uncertainties and may differ materially from those currently anticipated or desired.

Or referenced in any forward looking statements made as a result of a number of factors such factors include the company's determination as it finalizes its financial results for the fourth quarter and its financial results differ from the current preliminary unaudited numbers set forth in the press release issued today yesterday.

Other factors that the company may have currently identified or quantified those risks and uncertainties identified from time to time and the Companys reports filed with Securities and Exchange Commission additional discussion of these and other factors affecting the company.

Business and prospects as well as additional information regarding forward looking statements is contained in the slide presentation posted in connection with this call and the company's filing with Securities and Exchange Commission, we disclaim any intention or obligation to update or revise any forward looking statements whether as a result of new <unk>.

Future events or otherwise. In addition, there are non-GAAP financial measures used in this conference call a reconciliation of any non-GAAP financial measures to most comparable GAAP.

Financial measures can be found in the company's earnings press release.

And the presentation for the call on the Companys website at Www Dot DB insurance Dot com.

Clicking on the investors relations and then calendar of events.

That said I will now turn the call over to Powell Brown, President and Chief Executive Officer, you may begin Sir.

Thank you Norma good morning, everyone and thank you for joining us for our fourth quarter 2022 earnings call before we get into the details I wanted to make a few comments regarding our performance in 2020 to.

2022 was also a milestone for activity acquisition activity as we significantly increased our international capabilities with the additions of <unk>, ERP and BBB and the U K. Our consistently strong results are only made possible through the hard work and dedication of our nearly 15000 teammates now is transition.

Results for the quarter I'm on slide number four.

We delivered $900 million of revenue growing 22% in total and seven 8% organically our adjusted EBITDA margin increased by nearly 300 basis points to 31, 4% for the quarter. Adjusted net income per share was <unk> 50, <unk> growing by 28%.

We also completed nine acquisitions during the quarter with annual revenues of approximately $17 million overall, we're pleased with the results for the quarter I'm on slide five.

We achieved another milestone this year by delivering over $3 5 billion of revenue growing 17% in total and 8% organically.

Excuse me.

Our adjusted EBITDA margin remained strong for the year at 32, 8% on an adjusted basis, our net income per share increased nearly 7% to $2 28.

Lastly, we had a record year for M&A activity, completing 30 acquisitions with approximately $435 million of annual revenue.

Later in the presentation, Andy will discuss our financial results in more detail.

Im on slide six.

Yet.

Incremental price increases and lower limits being offered for placement in late Q4 of last year and early this year.

The placement of Cat property in Q4 last year and January of this year with some of the most difficult placements, we've experienced in decades with rates, increasing 20% to 40% or more.

However properties of lesser construction quality or that have experienced losses could be much higher and much higher than this range. As a result, we had customers unable to buy or afford full limits and therefore ended up increasing their deductibles or purchasing loss limits in order to manage their cost of insurance.

<unk>.

The placement of professional liability and excess liability remained competitive with rates down 5% to up 5% with public company D&O rates down five to down 20 or more regarding cyber. The story is similar to the last few quarters with rates and deductibles continuing to increase but we did see some slight moderation.

During the quarter.

Late in Q4, there were reforms impacting the legal and regulatory environment for insurance in the state of Florida, which included the elimination of one way attorneys fees and assignment of benefit.

Establishment of a reinsurance backstop for certain carriers and their requirement of arbitration prior to litigation. These changes should be positive for buyers of insurance, but it will take time.

Is in line with our expectations from an overall industry perspective, the number of transactions slowed materially compared to previous quarters like last quarter. If a business is considered to be a platform or a must have the market is still aggressive on pricing now.

Now I'm on slide five let's transition I'm, sorry, slide seven lets transition to and.

Discuss our performance of the four segments for the quarter, our retail segment delivered organic growth of two 7% with good growth experienced in most lines of business. Our organic growth was impacted by the slowdown in specialty lines due to lower auto and RV sales as well as slower growth in.

A couple of our employee benefits businesses due to an extremely tough comparable versus the fourth quarter in the prior year.

Our retail segment delivered another strong year of organic growth.

Revenue growth.

Six 5%.

We're very pleased with how our business is positioned and the capabilities. We have to serve our customers of any size and believe 2023 should be another good year.

Best in class solutions for our customers driving nearly 16% organic growth for the full year.

Wholesale brokerage segment grew seven 6% organically for 2022 and is well positioned to continue their success into 'twenty three.

For the quarter, our services segment delivered modest organic revenue growth as a result of winning new customers and increased storms claims with this expansion substantially offset by lower claims for certain businesses overall, we feel good about our capabilities and the value we deliver for our customers now let me turn it over to Andy to discuss our financial performance in more.

Great. Thank you Pam and good morning, everybody. We are over on slide number eight like previous quarters, we will discuss our GAAP results and then certain non-GAAP financial highlights for the fourth quarter. We delivered 22, 1% total revenue growth organic revenue growth of seven 8% and our EBIT.

EBIT margin increased by 220 basis points.

Our net income grew 43% and diluted net income per share increased by 42% to 51.

Both were impacted by the change in estimated acquisition earn out payables, which was a credit of $5 8 million in 2022, and a charge of $19 8 million in the prior year.

Effective tax rate decreased to 25, 2% for the fourth quarter of this year as compared to 27, 8% in the fourth quarter of last year, primarily driven by lower statutory rates for our international businesses and the impact of deductibility for acquisition earn out payable adjustments.

Our weighted average number of shares was substantially flat compared to the prior year and our dividends per share for the quarter increased to 11 five.

Or 11, 7% compared to the fourth quarter of 2021.

Rover on slide number nine this slide presents our results on an adjusted basis, which excludes the impact of movements in foreign currencies on both revenues and expenses.

The net gain or loss on disposals, the onetime acquisition and integration costs associated with GE ERP.

<unk> and BBB and the change in earn out payables. We've included on slides 18 through 26 reconciliations to the most comparable GAAP measures.

On an adjusted basis, our EBITDA margin grew by 290 basis points versus the prior year EBIT.

EBITDAX increased by 34, 9% and income before income taxes increased by 22, 6%. This.

The incremental growth rate of adjusted EBITDA as compared to adjusted income before income taxes was driven by higher year over year interest cost of $29 million and higher amortization of $7 million with both largely driven by the ERP work at and <unk> acquisitions, our adjusted net income for the quarter increased by 20%.

Six 9% and adjusted diluted net income per share was <unk> 50, increasing.

Increasing 28, 2%.

On slide number 10, our retail segment.

Segment delivered adjusted total revenue growth of 19, 8% driven primarily by acquisition activity and organic revenue growth of two 7% for the quarter.

We're on slide number 11, our national programs segment delivered adjusted total revenue growth of 34, 1% driven by organic revenue growth of 21, 9% acquisition.

<unk> activity and higher contingent commissions.

Organic growth was positively impacted by approximately $7 million due to the finalization of a growth bonus for one of our programs, which we do not anticipate recurring in 2023.

Well as the loss development for Hurricane Ian being lower than originally expected.

We're on slide number 12, our wholesale brokerage segment delivered adjusted total revenue growth of 17, 1% driven by recent acquisitions, good organic revenue growth of eight 1% and an increase in contingent commissions adjusted EBITDAX increased by 19, 9% with the associated margin.

Growing by 70 basis points, which was primarily impacted by increased contingent commissions and good organic growth, but was partially offset by higher variable operating expenses. We're on slide number 13.

Adjusted total revenues and organic revenue growth in our services segment were substantially in line with the prior year for the quarter adjusted EBITDAX increased $1 6 million or 23, 9% driven by continued management of our expenses. We're on slide number 14.

This slide represents our GAAP results for both years in 2022, we delivered revenues of over $3 5 billion growing.

Growing 17, 1% and earnings per share of $2 37.

Growing 14, 5%.

EBITDA increased by 14% to approximately one $2 billion for the year, our share count was substantially flat and our dividends paid during 2022 increased by 11, 3%.

On slide number 15.

This slide presents our results for both years on an adjusted basis. Our income before income taxes grew six 6% and net income per share was $2 and 28.

Growing by six 5% as compared to total revenue growth of 17, 3%. This difference was driven by higher interest and amortization associated with ERP orchid and BTB. Our adjusted EBITDAX margin remained strong at 32, 8%, but declined slightly by 40 basis points from the prior year.

Due to higher variable cost overall, we are very pleased with the results for 2022.

We're on slide number 16.

Part of evaluating the performance for the year and the fact that our captives are newer we wanted to provide some additional color.

We participate in to cat property captives with the goals to increase capacity drive additional organic growth participate in strong underwriting results likely do like we do with contingent commissions and deliver good returns in our invested capital one captive.

Participates on a quota share basis for certain of our wind and quake programs in the second participates on an excess of loss or reinsurance layer for personal lines wind program. Overall, we are very pleased with the top and bottom line performance knowing that certain quarters can have volatility when there are cat events.

Important to keep in mind that performance cannot be evaluated on one quarter, but is better viewed on a full year basis in.

In 2022, we recognized approximately $25 million.

Of incremental revenue with about $5 million driven by the acquisition of <unk> for 2023, we anticipate revenues of approximately $30 million to $35 million from a risk standpoint for both captives. We can have up to $13 million of exposure in any one occurrence and $25 million in the.

Aggregate as we always do we've used a disciplined approach to balanced upside potential and downside risk versus deployed capital and believe we have structured the program as well to deliver on our objectives.

Certain acquisitions at over performed our original expectations incremental interest expense and paying higher incentive bonuses to our teammates for their outstanding performance. In 2021 overall, we are in a strong cash generation and capital position finished the year with $650 million of available cash.

We also repaid the remaining outstanding balance of $150 million on our revolver that was drawn in connection with our acquisition of <unk> ERP BTB and work that we expect to continue to delever over the coming quarters as we have done in the past posted larger deployments of capital. We finished the year in a strong liquidity position.

With this capital the cash we will generate in 2023 as well as capacity on our revolver. We are well positioned to fund continued investments in our company.

We have a few comments regarding outlook for 2023.

First for contingent commissions, we anticipate them to be relatively flat year over year, but this will be ultimately driven by loss experience.

As it pertains to taxes, we expect our effective tax rate to be in the range of 24% to 25% a slight increase compared to 2022 due to a higher estimated tax rate in the U K the lower year over year tax benefit from the vesting of stock grants and limitations on the deductibility of certain compensation benefits.

We anticipate our interest expense will be in the range of $185 million to $195 million regarding interest income, we're seeing some nice improvement and are projecting income of approximately $14 million to $17 million subject to how the fed changes interest rates.

As it relates to amortization expense, we are projecting approximately $162 million to $166 million. This does not include amortization associated with acquisitions that we may complete during 2023.

As it relates to margins, we do not see any major headwinds or tailwind heading into 2023 that should materially impact our margins with that let me turn it back over to Powell for closing comments.

Andy for a great report as we closeout 'twenty two and look forward to 'twenty three we have a couple of observations first last year was another very successful year for Brown <unk> Brown, we delivered over $3 5 billion of revenues growing 17% had our largest year of acquisitions, while expanding our footprint and.

Abilities in the UK market, we invested in technology.

And we'll continue to invest in our capabilities in order to best serve the needs of our customers.

Guarding the economic outlook of 2023, while theres not theres a lot of uncertainty regarding inflation and labor shortages, we expect further economic moderation as the impact of higher interest rates take effect.

From an insurance standpoint were anticipating admitted market rate increases to be relatively consistent with last year, we expect cat property rates to be up 10% to 40% or more for at least the first half of the year as well as capacity to potentially be constrained if not potentially it will be constrained at the market needs to fully.

Digest and impact.

The impact of Hurricane Ian as well as other insured losses. In addition professional liability rates should continue to moderate downward.

Regarding recent acquisitions, they are performing well and we are experienced they were expecting good profitable growth and coming in the coming year.

On an M&A front, we have a good pipeline and will continue our disciplined approach to finding great companies that fit culturally and make sense financially.

Thank you.

One moment for your first question.

And our first question comes from Greg Peters with Raymond James Your line is now open Sir.

Great Good morning, everyone.

I know you don't like to <unk>.

Forecast organic revenue growth, but.

There are two items, one you called out in your commentary about catastrophe pricing and secondly in your retail segment.

You talked about some employee benefit headwinds.

Difficult comparisons so when I think about 23, Paul and Andy.

How will those variables.

The June 1st renewals on property cat and what's going on in employee benefits, how will that affect your organic results for this year this upcoming year.

Okay, let's start with the second part first let's talk about employee benefits.

Employee benefits.

Overall performed really well for the year and we're very pleased with those businesses.

And as we said in our prepared remarks that was actually really only in one or two businesses that had.

A setback.

Having said that I think that EV will.

<unk> performed well in the system.

We don't give organic guidance on that and we don't break out lines of business, but and from an employee benefit standpoint feel really good.

As it relates to the cat property pricing the variable there Greg as you know is not as.

As much or I mean, it is there are certain limitations on our ability to present limits in some instances, but it's more of in my opinion, it's more of an affordability issue and so if you think about if <unk> been giving rate increases, let's just say to yourself on your own.

Personal lines homeowners, if you got an increase of let's say, 10% a year for four or five years in a row and then all of a sudden we came on the fifth year and gave you a 25% increase there is there is a.

The buyers are tiring of that.

So having said that.

Availability of capacity and this market is unlike anything I've ever seen I've only been in the insurance industry for 33 years now so.

There is a lot more to go but.

I am not ever seen anything like this and.

We will continue to provide solutions to our customers, but sometimes the.

For example, I think we used last time and I'll use it again is if you ever.

An entity and they're paying $800 for their property and.

The renewal is a million eight.

And they say what can we buy for $1 million, which can't buy anymore insurance, we can't afford it.

So we're seeing that more and more Greg.

So the cat the cat pricing.

That is going to is it more of a wildcard the other thing we're seeing is.

In the.

Cat capacity in.

Accessing it in some instances.

There are there is commission pressure downward on some of those placements now so a lot of people just think well if the rate goes up X than.

Okay, I understand that's a moving target, especially.

In the southeast.

I guess for my second question just pivot Andy.

Andy in your in your comments.

You talked about.

Yeah.

You gave some guidance on adjusted EBITDA margins, you said, no tailwind or headwinds for for 'twenty. Three so maybe you can provide some context about is that it.

In terms of laying out expectations for the street is it is it one where just expect margins to be flat year over year or maybe.

Give us some color to help us frame, what your comments really mean.

Sure.

Well I think what we're trying to say on that one Greg is we don't see any major headwinds or tailwind going into the year.

We do have like most everybody else unknowns around what will happen with inflation in T&D, but we'll work our way through those pieces don't see any major incremental investments that we're making the business that we need to call out externally, we're always making investments in our business, but we do that each year through everything we do.

Dissipate that TNT will be up year over year, just not to the extent that what we saw 22 versus <unk> versus 'twenty, one right now so.

And that was really why we gave guidance going into 2022, because that was a big variable, but right now we're not seeing anything specific to that that would impact the margins in 'twenty three versus 22.

And just a.

Follow up on that when you think about organic for 'twenty three.

Is there some sort of a rule of thumb I know some of your peers offer roll from that of organic certain amount. We can expand margins. If organic is not I mean do you have any sort of metric that youre thinking about in terms of organic as its impact on margins.

No.

Fair enough. Thanks for your answers.

Thanks, Greg.

Thank you.

One moment for our next question.

And our next question comes from Rob Cox with Goldman Sachs. Your line is now open.

Hey, Thanks for taking my question.

Just with respect to.

Retail you called out a couple of headwinds I was wondering specifically on group benefits.

<unk> comp.

It was created by a true up of exposure expectations and the prior year quarter or more so by <unk>.

A deceleration in growth this quarter.

No Robert maybe the way to think about it is we had we had a few businesses last year that just had absolutely outsized performance in the fourth quarter.

One of them was a newer businesses was starting so as in it was in growth mode.

Don't read more into that into the fourth quarter. There is no reason to.

Got it. Thank you that's helpful and then.

And maybe just.

Moving on to some of the Florida Legislative changes.

Any comments on what you think the impact of those might be for Brown <unk> Brown in the near term and then perhaps longer term.

So Rob.

First of all we think that.

Based upon everything we see they are positive for the operating environment for risk bearers and for insurers in the state of Florida, I'd like to point out that we anticipate that the trial bar will challenge those so I don't think those go go in play.

<unk> easily so I don't know what that means relative to timing and adoption relative to.

The marketplace, what our governor and the state of Florida is trying to do fundamentally is create a one viable to competitive three sustainable marketplace and the state of Florida is not really want to be so called in the insurance business.

But with this disruption they will have to be bigger in the insurance business for the next several years. So I believe we believe that the.

This is a multiyear transition to bring the Florida marketplace, specifically personal lines in Florida back to that kind of environment. So it will probably take three to five years to have some additional participation by the state of Florida.

I E. What they're proposing in this and it may need more going forward, but it is not the intent of the governor.

To expand their participation I E as being a state risk bearer.

It's hard to tell because you've got challenges ahead, you've got other things, but what we really.

Want and need in the state of Florida is.

Relatively affordable homeowners prices for all sized homes.

With the coverage a home of 200000 versus one that's over $1 million and everything in between and so.

So.

There's a lot of disruption across those.

All of those sizes.

Got it thanks, and maybe just lastly could you quantify the annual growth bonus and national programs and maybe specifically the programs, where you see contingent going in 2023.

So.

I think Rob has two pieces inside there so one of the things we talked about on the growth of bonus.

That was about $7 million and as of right now we don't see that recurring in 2023.

And again that is inside of the organic calculation not in contingent commissions and then we didn't give guidance on contingence by the individual segments. Mark comment was just overall for the company that.

At least as of right now see them relatively flat in 2023, but all depends upon loss experienced during the year and overall growth and profitability.

Thank you.

Sure.

Thank you.

One moment for our next question.

Our next question comes from Western Bloomer with UBS. Your line is now open.

Hi, Thanks for taking my questions first one just to follow up on the employee benefits comment can you just remind us of.

The seasonality of that business and do you expect there to be any material headwinds in the first quarter as well.

Hey, good morning, Western yes.

Yes, the <unk> business does have some seasonality to it and it's generally a little bit if you look across the quarters first normally its a little bit more weighted to Q1 and thats just because of the way in which revenue is is recognized in that business.

And then you normally see it.

Fourth quarter is normally one of the lower that should kind of just naturally how that business participates.

<unk> participates.

From at least the.

Some of the headwinds and what we've talked about in the fourth quarter. Some of those may carryover into Q1, but.

Don't see any issues on a full year basis similar to our comments about how we thought about the business for 2022.

Got it. Thank you and then kind of similar type of question within professional lines I know you highlighted.

A slowdown in D&O pricing is there any seasonality or how should we think about the impact of lower rates in that business, both in retail and wholesale.

So the way I would just look at it is.

If you think about.

An environment, which has had rate pressure up for the last several years.

And in some cases dramatically more than the public markets.

They're coming down substantially because it's a very competitive environment and one might speculate western that people that are reducing their catastrophic property exposure would want to write business elsewhere, and where might they do it and they might say in casualty or professional lines.

I think it's important to think of that as as.

Headwind slight but a headwind on that segment of our businesses because.

I think it will be down and in some instances down.

A good bit.

Great. Thank you and then last one just on the margin I know you highlighted no material headwinds or tailwind and maybe I'm getting too granular here, but is the March 'twenty two M&A that came at a higher overall margin is that business still running higher overall relative to kind of the core Brown <unk> Brown.

When you say the March do you have the margin the margin guidance that you gave for the three months <unk> combined.

As you have the all the businesses are performing in line with our expectations, we talked a little bit about some of the seasonality during the earnings call last quarter, but.

No. They are all kind of right in line with what we expected.

Great. Thanks for taking my questions. Thank you.

Thank you.

One moment for our next question.

And our next question comes from Elyse Greenspan with Wells Fargo. Your line is now open.

Hi, Thanks, good morning.

My first question.

Yes, so one of the items that we saw in the third during the fourth quarter.

We did recognize about three or $4 million that we had anticipated we would not recognize in the fourth quarter. So if you remember back to the call. We said we had backed out to the third quarter call, we had backed up $15 million year to date.

Instead, we probably would.

Therefore, not recorded in the fourth quarter development was not at the extent that we anticipated at that state, which is that's positive.

So we recognize those three to four.

And then as we look to 2023.

We would anticipate earning some in 'twenty three not back to kind of normal levels. Because there is some still carryover in the in the calculation, but we've taken that into consideration when we've given guidance at a total level for the company of substantially flat.

Okay, and then the interest income right I know in the past you guys had said maybe fiduciary income wouldn't be that big but it sounds like youre seeing a little bit of a pickup there right you guys said $14 million to $17 million what is that.

To your margins in 'twenty three.

Yes, if you look at it by itself that would be a true statement it would be accretive to margins.

Yes, again, I think isolation I think that's probably fair lease, but there is.

Within our business like most businesses, but at least we'll talk to our specifically theres always a lot of moving parts.

And you've always got things move kind of moving back and forth and that was really why we're trying to give guidance about any major tailwind or headwinds that are out there.

And then one last one the employee benefits you guys said is concentrated in the first part of the year, but it does sound like what happened in the fourth quarter was maybe just.

Just a really tough comp with last year or so.

When we think about retail and I know you don't like to give guidance, but is there anything that stands out to start the year that would make.

The first part of 'twenty, we have tougher comps in the back part of the year.

Nothing to add a top level I think the western earlier question is will there be potentially a little bit of headwind in the first quarter.

From what we saw in the fourth quarter, a little bit, but we feel really good about our business and how its position and the capabilities that we have served customers of all sizes in that business.

Feel like we will perform well during 2023.

Okay. Thanks for the color.

Right. Thank you. Thanks Elyse. Thank you one moment for our next question.

And our next question comes from Michael Zaremski with BMO capital markets. Your line is now open.

Hey, good morning.

Maybe focusing back on the desk.

The dislocation.

Parts of the property market.

Curious at a high level, if your view has changed and whether this is Wes.

The environment is kind of a net benefit or to growth or margins or net neutral or maybe even that negatively in others a lot of moving parts clearly.

<unk> came out and talked a little bit about some commission pressures, but rates are moving moving materially higher. So just kind of curious if you see that all the moving parts net net is.

As a wash potentially or if your view has changed.

Yes, no I would say.

Michael it's probably.

A net positive, but slight net net positive and the reason I say hedge with a slight is because of.

Changes that we cant see in the market yet I E.

Limits for limits being reduced by carriers or some potential for.

Any commission pressures or anything of that nature, but.

And basically also clients just basically raising their hand, and saying look uncle and I know that's tough, but it's true because we are the deliver of bad news.

When it comes like this so it will be.

I think it will be slightly positive is how I would want you to think about that.

Okay.

Helpful, maybe switching gears to <unk>.

Inflationary impacts on.

On the income statement for Brown.

There was a comment made about some unknowns on inflation and T&D.

When I think about.

<unk>.

Commission model I think of it kind of be somewhat.

More insulated from.

Wage pressures due to that kind of how how the.

Frontline salespeople are paid but maybe I'm wrong and maybe you can just kind of elaborate on.

If I kind of TNT.

<unk> and inflation.

So, let's let's talk about your comment around <unk>.

Wage pressure, we're not immune to wage pressure and I think that's a very important thing and one of the things that.

We find just like anybody else out there in our space as the war on talent is very competitive and people are looking for people not just salespeople, but they could be service people our marketing people are administrative.

People that administer claims or things like that.

It's a very competitive marketplace. So I don't want you to think that we're immune to that because we are far from that that's number one number two when we say TNA pressure, it's not as though we think theres going to be so much that much more travel and entertainment, we think that the if you do this.

Same there is just significant pressure on let's just say an airplane ticket or a hotel, depending on where you're going and so that's where we're seeing that pressure and so.

Our business is not unlike many of the other businesses that you know are follow or all of the above.

It is an inflationary environment the pressure here.

Although it is high is not as high as it is in England and in Ireland that wage pressure seems to be higher there.

But we're working through that as well.

So that's kind of what we mean by that Michael.

Okay. That's helpful and just maybe just sneaking one quick one in any.

Impact from the.

Flooding in California.

Sure.

Program that you would administer.

Could be material.

No.

We havent seen anything interestingly enough in California.

So.

It's no we don't we don't see that.

Thank you.

Thank you. Thank you one moment for our next question.

And our next question comes from Iran.

<unk> with Jefferies. Your line is now open.

Hi, good morning, everybody and thanks for taking my questions.

I guess my first question and I think it maybe ties back a couple of other questions you've already received.

As you think about the property cat rate environment, where do you see maybe which segments do you think would benefit most and which ones would you see maybe facing greater pressure from.

The various components, you talked about kind of reduced commissions, maybe more difficult.

<unk>, placing business.

I want to make sure I understand that Youre on can you just.

Repeat the question or elaborate a little bit youre, saying, what do you think becomes more difficult and then what becomes easier as did I hear that correctly.

I'm asking of the four segments that you have or I guess really three retail national programs and wholesale which do you think would benefit more than which would may be face greater pressure.

Okay. So far.

First off I would say that.

The I look at it a little differently than benefit more or.

Or not you didn't use this term or suffer more maybe.

For that let's look at retail for a moment retail.

Has.

Good fortune, we deal directly with the customer so youre going to have a lot of.

Heavy lifting relative to delivering.

Those.

Particular increases and you may have.

As I said you might have commission.

Commission reductions in some instances, but rate's going to go up and I would say that it's mark.

Mildly positive relative to oil.

Organic growth in that business and wholesale it makes their jobs property brokers significantly.

More difficult and trying to fill out lines.

Business. So if you had a $100 million line and it was handled by one or two markets and then now.

That market. It took 80% of it is pulling back or cutting their participation you got to put six or seven markets in to get to your $100 million.

That said.

There will continue to be.

Pressure there as well.

And I think that there is more the most conflict if you want to call. It that in placements will be in retail and wholesale and national programs, It's a matter of capacity availability.

So as you know there are a number of carriers out there who have allowed their capacity to be underwritten.

By a number of different type of MGH and Mg use in a number of those were not profitable not just last year, but over many years before.

So there is what we consider a flight to quality.

And in the sense of our underwriting facilities, we're very pleased with the results that we've delivered prior to.

Gives me last year, and including last year with the losses and Ian Nicole So.

I would say that in in programs. It's a different thing there their growth potential is limited by availability. It is not a conflict of.

And the other two there's the hand to hand combat of getting people to actually put limits up and do it in the in the underwriting facilities, we have that authority and we can do what we can do but we're limited by the capacity. So if in fact.

A market or markets decides to cut back on their capacity they give to us that will impact our ability to grow and Conversely, if they decide to change their commission level.

And that would impact our ability to grow the one thing that I do want to mention.

I think it's important for everybody to think about this.

Things are never as good as they seem or as bad as they've seen and what I mean by that is even though the cat market is.

But there are certain markets that are approaching it in a way that.

They are looking very opportunistically at it.

And then there are other markets that are looking at it like a long term partnership.

Obviously, we would prefer the latter as opposed to the former but we're out looking for capacity globally. So.

So I just want everybody to kind of know that.

This pressure too will pass at some point.

Thank you that's helpful color, if I could switch gears to M&A for a second.

So I think you had said that the pipeline remains robust that said you are seeing M&A activity slowing is that just a function of a bid ask spread that is too wide or are there other drivers there.

No no no I think.

And when you say the M&A activity is slowing remember we're talking about the industry. So as you know private equity has been a very big participant in the number of private equity announced transactions in Q4 was down substantially over the prior quarters <unk> Q4 of the prior year.

I think that there is this interesting sort of.

Sure.

We're kind of at this unusual clash point, if you want to call. It that which is the market with increased interest rates and buyers would like to see a slight decrease in multiples paid.

And yet there are.

Businesses, some of which are owned by private equity that would like to monetize their businesses at what were historic levels or multiples in anticipation of other opportunities for them.

Or maybe better said, maybe they think that they think there will be pressure on multiples going forward. So they want to get out at a higher multiple if possible then they might think of in a year from now I'm just using that as an example.

I think we're going to see a lot of activity in.

In the next 12 months.

The good part about our business is we're focused on the long term and long term to us is not one year or three years, it's a very long time and so.

And focus on growing our business organically.

Thank you very much.

Thank you thank.

Thank you one moment our next question.

Yes.

And our next question comes from Mark Hughes with <unk>. Your line is now open.

Yes, Thank you and good morning.

Morning.

You had talked.

A good amount about.

Your quest for capacity did you find any restrictions have you seen with.

Harder reinsurance market any cutback on your programs and Youre thinking about.

<unk> or quake for instance.

Anything that.

It is noteworthy that could perhaps impact our gaming growth.

Yes so.

Thanks for the question.

That is somewhat of a moving target, but at the present time.

We think.

A good outcome is flat in terms of no reduction in capacity.

We may have certain of the entity.

Entities or businesses, where they would maybe be trading some capacity or debt net down on a net basis just slightly.

But right now we think its pretty neutral and.

From our vantage point, we view that as a win so I am not aware of something and you specifically asked about Florida quake, but that could involve our wind facilities as well.

But the thing that we talked about last year and we've talked about in prior years, but it is even more magnified this year our growth opportunities.

In national programs will be directly and not exclusively but directly linked to the amount of new capacity that we're able to secure and so if in fact, we are not able to.

Understood and then on the captive you mentioned some of the economics, there, 30% to $35 million in revenue, but you've got loss retention of $13 million.

Per event, one would think you would need a pretty high margin on that revenue in order to.

Feel good about generating a return over multiple years, if you've got the clinical plan.

You think about that properly.

Well I'm going to I'm going to I'm going to answer your question twofold number one I want you to think about what a captive is there's really three parts to the captive.

There is the loss the retention amount that you retain on any one loss that's just losses.

Number two which is the reinstatement premium which means you put the program back in place for a subsequent event and the third would be if you had any profits in that period of time in that captive prior to them being distributed.

And so what I would tell you is that we are very mindful of the way, we invest our capital and we are looking for returns that help us grow the business.

Hey, Mark just a question for you if you can expand on something when you said.

You talked about providing adequate returns how do you.

Walk us through how you mean that because I guess I think we're well.

Not seeing it the same way you are but.

If you see I think.

We're retaining third pointing.

Yes.

You're generating $30 million in revenue.

So you have a 50% margin.

$15 million, but if your retention per event that $13 million.

And maybe a hurricane hit Florida, one out of three years.

And that influences that.

The economics.

Just real simple math.

Yeah.

Okay.

They're probably lies the opportunity to clarify on the some more.

Here's the way we want everybody to try to think about these as what we're doing is we're participating in the underwriting profits.

On these captives what do we do on contingent commissions, we participate in the underwriting profits. So this is not where they are coming in and we're paying commissions and everything else on the business. So I think thats part of just the piece that maybe youre thinking about.

As traditional call it operating profit, it's coming through as well.

Excuse me its normal operating profit versus underwriting profit.

Sure.

So we're very very pleased with the performance this year into Powerpoint, we wouldn't put our capital into these if we didn't think that we can get an appropriate return.

And the $13 million Mark is up to that doesn't mean, it would be 13, Mel equally so.

As a very important distinction it can be less than that or substantially less than that.

Yes.

I appreciate the clarity thank you no. Thank.

Thank you.

Thank you one moment for our next question.

And next question comes from Michael Ward with Citi. Your line is now open.

Thank you guys good morning.

One last one maybe I was wondering if you could share any color on the profit commissions and programs and if any of any of that was related to maybe hurt hurricane in true ups.

Hi, Good morning, Mike Andy here is the wouldn't say anything that was related to hurricane Ian true ups right. What we did at the end of the third quarter as we had backed off the $15 million as we mentioned earlier and we had also at that point said based upon what we thought.

The losses were going to be we would not record $3 million to $4 million and one of our programs that development did not come in at the anticipated level, which is again that's a positive thing. Therefore, we did go ahead and record that three or $4 million in the fourth quarter.

You can make it sometimes you don't that's why we see generally the most volatility in our national programs. They just they move back and forth.

Super helpful. Thank you maybe one last quick one just on the pressure in specialty.

Is that I think you called out auto lower auto and RV sales.

Is there anything else there that we should be thinking about.

No I don't think so I mean remember.

If you think out a little bit sort of speculate on that the outlook on that industry I think.

Robley inventory levels will probably lift a little in the third quarter and beyond in the year.

Also in light of the economic environment that will probably be some more incentives I don't know that but incentives put in place to move.

Units.

So if the inventory is there and I use the most important thing is I can't we can't fully predict that we think youre going to see some uptick in that but slight.

Okay. Thanks, very much guys.

We will take one more question normally that'd be great.

Thank you.

Our next question.

It comes from the line of Derek <unk> with <unk>. Your line is now open.

Good morning, Thank you.

Had a question on the programs business.

Thank you previously talked about your expectation for programs organic growth to kind of moderate.

Yeah. So one of the other items in there we talked about it was.

We said, we delivered $25 million of revenue from the captives and about $5 million of that came through the <unk> acquisition. So.

The remainder of that being on the organic side, we're going to see continued growth in 2003, but not at that same level Eric.

Got it Okay. That's helpful. And then just one quick one.

I know that the European.

<unk> integration is going well can you just give us some color on your European economic outlook.

The anticipated impact on the organic growth for those businesses.

Sure so.

Remember <unk> ERP is.

England and Ireland, both Republic of Ireland, and we have business is already in the Republic of Ireland, and Northern Ireland and BBB, we do business in.

Excuse me, Italy, meaning we are the largest producer of Italian business into Lloyd's.

That's over 50% of that business and then we do business in France, and in Belgium, and we also do business, obviously in England into the London marketplace. So what I would tell you is that.

In England, it's not dissimilar to here.

Which you see a lot of.

Pressure on <unk>.

Wages and cost of living I E fuel oil and things like that.

And so but from a comp and from a customer standpoint, we have not yet seen a significant downdraft on their buying habits. So what I would tell you is we think that.

The economy seems to be moving along.

Find way there as it relates to.

So we are continuing to have nice growth inside of our.

Our Lloyd's brokers, which we have now three.

And so we're very pleased that deck is lawnmower and BBB.

Okay. Thank you.

Right.

Thank you.

Im showing no further questions I'd like to hand, the conference back to Mr. Paul for any closing remarks.

Thanks Norma. Thank you all very much. We appreciate your time and energy we thought last year was a really good year and we're excited about the future I think my final comment would be this.

As it relates to trends, we don't think that trend is one quarter and we don't measure the outcomes of the business over a quarter, we look at years and multiple years and so as it relates to each of our three largest segments. We feel good about going into next year there are some.

<unk> I E because of market constraints and economic constraints, but we're going to work our way through those so we look forward to talking to you next quarter and have a nice day. Thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

Q4 2022 Brown & Brown Inc Earnings Call

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