Q4 2024 Brown & Brown Inc Earnings Call

January 28, 2025

Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call and including answers given in response to your questions may relate to future results and events or otherwise before were looking.

In nature.

Such statements reflect our 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.

information discussed during this call including information contained in the slide presentation posted in connection with this call and including answers given in response to your questions may relate to future results and events or otherwise before we're looking in nature.

<unk> that its financial results differ from the current preliminary unaudited numbers set forth in the press release issued yesterday other factors that the company may not have currently identified or quantified and those risks and uncertainties identified from time to time in the company's reports filed.

Such statements reflect our current views.

for the fourth quarter and are intended to fall within the safe harbor provisions

With the Securities and Exchange Commission additional discussion on.

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.

Of these and other factors affecting the company's 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 in the company's filings with the Securities and Exchange Commission, we disclaim any intention.

An obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise. In addition, there are certain non-GAAP financial measures used in this conference call a reconciliation of any non-GAAP financial measures to the most comparable GAAP.

set forth in the press release issued yesterday, other factors that the company may not have currently identified or quantified, and those risks and uncertainties identified from time to time in the company's report.

The interim measures can be found in the company's earnings press release or in the Investor presentation for this call on the company's website at Www Dot B B insurance dot com by clicking on Investor Relations and then calendar of events with that said I.

filed with the Securities and Exchange Commission. Additional discussion on...

of these and other factors affecting the company's business and prospects, as well as additional information regarding forward-looking statements.

Speaker Change: I will now turn the call over to Powell Brown, President and Chief Executive Officer, you may begin.

We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of new information, future events, or otherwise.

Powell Brown: Thank you Michele good morning, everyone and welcome to our fourth quarter earnings call.

Powell Brown: First we'd like to express our deepest condolences to the many individuals impacted by the California wildfires the magnitude of the devastation caused by these events is horrific we're committed to assisting those impacted by these terrible fires.

In addition, there are certain non-GAAP financial measures used in this conference call, a reconciliation of any non-GAAP financial measures to the most comparable GAAP financial measures.

Powell Brown: Now transitioning to our results.

can be found in the company's earnings press release or in the investor presentation for this call on the company's website at www.bbinsurance.com by clicking on investor relations and then calendar of events.

Powell Brown: Our fourth quarter performance was just outstanding and capped off another incredible year, where our team delivered nearly $5 billion of revenue, which included double digit organic and double digit earnings per share growth as well as strong margin expansion.

Powell Brown: These results are only possible through the dedication of our 17000 plus teammates delivering for our customers every day.

With that said, I will now turn the call over to Powell Brown, President and Chief Executive Officer. You may begin. Thank you, Michelle. Good morning, everyone, and welcome to our fourth quarter earnings call.

Powell Brown: Over the years, we've worked diligently to build a highly diversified business that consistently generates best in class financial results. The reason we can deliver these results is due to our unique operating culture now, let's get into the results for the fourth quarter I'm on slide number four for.

First, we'd like to express our deepest condolences to the many individuals impacted by the California wildfires. The magnitude of the devastation caused by these events is horrific. We're committed to assisting those impacted by these terrible fires.

Powell Brown: For the fourth quarter, we delivered revenues of $1 4 billion growing 15% in total and 14% organically over Q4 of 2023, our adjusted EBITDA margin improved by almost 200 basis points to 33% and our adjusted earnings per share grew 24.5%.

Now, transitioning to our results.

Our fourth quarter performance was just outstanding and capped off another incredible year where our team delivered nearly five billion of revenue which included double-digit organic and double-digit earnings per share growth as well as strong margin expansion.

Powell Brown: 86 <unk>.

Powell Brown: On the M&A front, we completed 10 acquisitions with estimated annual revenues of 137 million across the board. It was a very strong quarter.

These results are only possible through the dedication of our 17,000 plus teammates delivering for our customers every day.

Over the years, we've worked diligently to build a highly diversified business that consistently generates best-in-class financial results.

Powell Brown: On slide five for the full year of 2024, we delivered revenues of $4 8 billion growing 13% in total and over 10% organically. Our adjusted EBITDA margin was over 35% increasing more than 100 basis points on an adjusted basis, our diluted to Duluth.

The reason we can deliver these results is due to our unique operating culture. Now, let's get into the results for the fourth quarter. I'm on slide number four.

For the fourth quarter, we delivered revenues of $1.4 billion, growing 15% in total and 14% organically over Q4 of 2023.

Powell Brown: <unk> excuse me net income per share grew over 18% to $3 84, and we generated nearly $1 2 billion of cash from operations.

Our adjusted EBITDAC margin improved by almost 200 basis points to 33%.

Powell Brown: We had another good year of M&A, completing acquisitions with approximately $174 million of annual revenue with the largest being Quinn tests in the Netherlands, we'd like to extend a warm welcome to all the new teammates that joined US during 2024, and we're pleased with the quality of the organization and our new capabilities.

to $0.86. On the M&A front, we completed 10 acquisitions with estimated annual revenues of $137 million.

Across the board, it was a very strong quarter.

I'm on slide 5. For the full year of 2024, we delivered revenues of $4.8 billion, growing 13% in total and over 10% organically. Our adjusted EBITDAC margin was over 35%, increasing more than 100 basis points.

Powell Brown: I'm on slide six from an economic standpoint, there were no major changes for the markets in which we operate as compared to the last few quarters.

Powell Brown: Many business leaders have shifted from being cautious to cautiously optimistic. In addition, we did not see company has materially changed their levels of investment as they are still hiring and growing their revenues generally at levels similar to the second and third quarters of 2024 overall the economies in which we operate are relative.

On an adjusted basis, our net income per share grew over 18% to $3.84, and we generated nearly $1.2 billion of cash from operations.

We had another good year of M&A, completing acquisitions with approximately $174 million of annual revenue, with the largest being Quintes in the Netherlands.

Powell Brown: Stable, which we view as a good backdrop for our.

Powell Brown: For our growth opportunities in 2025 and beyond.

Powell Brown: From an insurance pricing standpoint rate increases for most lines continued power.

We'd like to extend a warm welcome to all the new teammates that joined us during 2024 and we're pleased with the quality of the organization and our new capabilities. I'm on slide 6.

Powell Brown: However, they are moderating downward as compared to last quarter and last year, except for ongoing upward pressure on auto and casualty. The line that had the largest change for the quarter as compared to last year with cat property, which we'll discuss in more detail.

in which we operate as compared to the last few quarters.

Many business leaders have shifted from being cautious to cautiously optimistic.

Powell Brown: Pricing for employee benefits was similar to prior quarters as medical and pharmacy cost continued to be up 7% to 9%.

In addition, we did not see companies materially change their levels of investment as they're still hiring and growing their revenues, generally at levels similar to the second and third quarters of 2024. Overall, the economies in which

This ongoing upward pressure in the complexity of healthcare are driving strong demand for our employee benefit consulting businesses.

Powell Brown: With the investments we've made and continue to make we are well positioned to help companies of any size navigate these market challenges.

Powell Brown: Rates in the admitted P&C market moderated slightly as compared to last quarter and were up.

Powell Brown: 2% to 7% for most lines versus the prior year.

Powell Brown: Downward trend for workers compensation rates remained and they were flat to down 5% in most states.

Powell Brown: For the fourth quarter rate increases for non cat property, we're still in the range of flat to up five.

Powell Brown: For casualty, we continue to see rate increases for primary layers, mainly due to the ongoing size of legal judgments in the U S.

Powell Brown: Consistent with the last few quarters rates for excess casualty increased in the range of 1% to 10%.

Powell Brown: For professional liability, we saw rates flat to up 5% as compared to last year.

Powell Brown: Now shifting to the E&S markets first in reference to cat property at the beginning of the fourth quarter. There was speculation that the impacts of hurricane a lean and Milton would slow the recent declines of cat property rates or even reverse the trend entirely base.

Powell Brown: Based on insured losses, and the fact that both storms or heavy flooding events versus wind cat property rates continue to decrease throughout the fourth.

Powell Brown: Fourth quarter <unk>.

Powell Brown: On average rates were down 10% to 20% similar to the end of the third quarter with more customers seeing decreases closer to or in excess of 20%.

Powell Brown: From a buyer's perspective, some leverage to lower rates to increase their limits or modify deductibles, while others real realize the savings.

Powell Brown: As a result of our broad diversification rate changes for individual lines of business generally will not materially impact. The total results for our company. The major drivers of our organic growth or the economy and our ability to win net new business.

Powell Brown: This quarter was another. Good example, we had some lines that were up and some lines that were down while still delivering strong results.

Powell Brown: On the M&A front, we had a good quarter, we acquired 10, great companies of $137 million of annual revenue and our largest acquisition was Quinn tests, we're very excited about our Dutch market position and our ability to grow over the coming years from an overall market perspective competition remains fierce for high quality businesses.

Powell Brown: And we're starting to see more activity from financial sponsors.

Powell Brown: For the smaller and midsized deals as interest rates are beginning to decrease I'm now on slide seven let's transition to the performance of our three segments for the fourth quarter retail delivered four 4% organic growth driven by good performance in most lines of business. We're pleased with the level of net new business as.

Powell Brown: It was consistent with our strong performance over the last few quarters organic growth was partially impacted by the timing of our new business and certain nonrecurring revenue for the full year, we delivered strong organic growth of five 8% as our team is performing well and we feel good about our prospects for $2000.

Powell Brown: 25.

Programs delivered another outstanding quarter with organic growth of 38, 6%. This performance was driven by a number of our programs with strong new business and exposure unit expansion as well as claims revenue associated with the Q3 and Q4 Hurricanes.

For the smaller and midsized deals as interest rates are beginning to decrease I'm now on slide seven.

It's transitioned to the performance of our three segments for the fourth quarter retail delivered four 4% organic growth driven by good performance in most lines of business. We're pleased with the level of net new business as it was consistent with our strong performance over the last few quarters organic growth was partially impacted by the time.

Powell Brown: Our lender placed business and captives performed very well and our cat property business continue to grow even with cat property rates decreasing.

For the full year, we grew 22, 4% organically an amazing result.

<unk> of our new business and certain nonrecurring revenue for the full year, we delivered strong organic growth of five 8% as our team is performing well and we feel good about our prospects for 2025.

Powell Brown: As one of the largest if not the largest global operator of MGH and MG use we've made thoughtful and strategic investments, creating meaningful differentiation and resiliency in the marketplace.

Powell Brown: Wholesale brokerage delivered another good quarter with organic revenue growth of seven 1%. This performance was driven by growth across all lines through a combination of net new business and exposure unit increases that was somewhat muted by the downward pressure of cat property.

Powell Brown: For the full year wholesale delivered strong organic growth of nine 1% and we have good momentum heading into 2025 now I'll turn it over to Andy to get into more details regarding our financial results great. Thank you Paul good morning, everyone.

Our lender placed business and captives performed very well and our cat property business continued to grow even with cat property rates decreasing.

For the full year, we grew 22, 4% organically and amazing results.

Andy: Our financial results in additional detail.

As one of the largest if not the largest global operator of MGH and MGE use we've made thoughtful and strategic investments, creating meaningful differentiation and resiliency in the marketplace.

Andy: We will refer to EBITDAX EBITDAX margin income before income taxes or diluted net income per share, we're referring to those measures on an adjusted basis. The reconciliations of our GAAP to non-GAAP financial measures can be found either in the appendix of this presentation or in the press release, we issued yesterday.

Wholesale brokerage delivered another good quarter with organic revenue growth of seven 1%. This performance was driven by growth across all lines through a combination of net new business and exposure unit increases that was somewhat muted by the downward pressure of cat property.

Andy: We're over on slide number eight we delivered total revenues of $1 billion 184 billion growing 15, 4% as compared to the fourth quarter of 2023.

For the full year wholesale delivered strong organic growth of nine 1% and we have good momentum heading into 2025 now I'll turn it over to Andy to get into more details regarding our financial results great. Thank you Paul Good morning, everyone I'll review, our financial results in additional detail.

Andy: Income before income taxes increased by 27, 2% and EBITDA grew by 22, 6%. Our EBITDA margin was 32, 9% expanding by 190 basis points over the fourth quarter of the prior year.

Andy: When we refer to EBITDAX EBITDAX margin income before income taxes or diluted net income per share, we're referring to those measures on an adjusted basis.

Andy: Our effective tax rate for the quarter increased slightly to 24, 7% versus 24, 1% in the fourth quarter of the prior year.

Andy: Diluted net income per share increased 24, 6% to 86.

Andy: Reconciliations of our GAAP to non-GAAP financial measures can be found either in the appendix of this presentation or in the press release, we issued yesterday.

Andy: Our weighted average shares outstanding increased slightly compared to last year as we continued to prioritize paying down our floating rate debt lastly, our dividends paid per share increased by 15, 4% as compared to the fourth quarter of 2023 overall it was a very strong quarter.

Andy: We're over on slide number eight we delivered total revenues of $1 billion $184 million growing 15, 4% as compared to the fourth quarter of 2023.

Andy: Income before income taxes increased by 27, 2% and EBITDA grew by 22, 6%. Our EBITDA margin was 32, 9% expanding by 190 basis points over the fourth quarter of the prior year.

Andy: We're on slide number nine the retail segment grew total revenues by nine 5% with organic growth of four 4%. The difference between total revenues and organic revenue was driven substantially by acquisition activity over the past year and higher contingent commissions.

Andy: Our effective tax rate for the quarter increased slightly to 24, 7% versus 24, 1% in the fourth quarter of the prior year.

Andy: EBITDA margin expanded by 100 basis points to 27, 8% driven by higher contingent commissions finalization of full year performance incentives and leveraging of our expense base. This growth was partially offset by higher noncash stock based compensation.

Andy: Diluted net income per share increased 24, 6% to 86.

Andy: Our weighted average shares outstanding increased slightly compared to last year as we continue to prioritize paying down our floating rate debt lastly, our dividends paid per share increased by 15, 4% as compared to the fourth quarter of 2023 overall it was a very strong quarter.

Andy: We're on slide number 10 programs had an excellent quarter with total revenues, increasing 28, 7% and organic growth of 38, 6% keep in mind that a portion of this growth was associated with the $19 million charge recorded in 2023 for the change in reinsurer.

Andy: <unk> related to one of our captives.

Andy: Growth in total revenues benefited from higher contingent commissions, but was lower than organic due to net disposition activity in the prior year.

Andy: EBITDA margin expanded by 100 basis points to 27, 8% driven by higher contingent commissions.

Andy: Our EBITDA margin expanded by 660 basis points to 47, 9%, primarily driven by leveraging our expense base and to a lesser extent the sale of certain businesses in the fourth quarter of 2023.

Andy: Mineralization of full year performance incentives and leveraging of our expense base. This growth was partially offset by higher noncash stock based compensation.

Andy: As we discussed in our third quarter earnings call, we anticipated recording $12 million to $15 million of flood claims processing revenue in the fourth quarter associated with Hurricanes Helene and Milton.

Andy: We're on slide number 10.

Andy: Programs had an excellent quarter with total revenues, increasing 28, 7% and organic growth of 38, 6% due to mine at a portion of this growth was associated with the $19 million charge recorded in 2023 for the change in reinsurance related to one of our captors.

Andy: As a result of faster than anticipated adjudication and increased average severity, we recorded approximately $28 million.

Andy: With increased visibility into the timing of adjudicating claims in severity. We now anticipate recognizing revenues of approximately $14 million to $18 million in the first half of 2025 with the majority being recorded in the first quarter of this year.

Andy: Growth in total revenues benefited from higher contingent commissions, but was lower than organic due to net disposition activity in the prior year.

Andy: We're on slide number 11, our wholesale brokerage segment had another good quarter with total revenues, increasing 11, 6% and organic growth of seven 1% the.

Andy: The incremental expansion in total revenues in excess of organic was driven substantially by higher contingent commissions, our EBITDA margin decreased by 140 basis points to 25, 7% due to the Finalization of full year performance incentives along with certain one time cost.

As a result of faster than anticipated adjudication and increased average severity, we recorded approximately $28 million with increased visibility into the timing of adjudicating claims in severity. We now anticipate recognizing revenues of approximately 14 to 18.

Andy: We're over on slide number 12.

Andy: This slide presents our results for both years, our EBITDA grew by 17% with the margin increasing 130 basis points to 35, 2% with net income before income taxes growing 19, 6% and net income per share was $3 84.

Andy: Already being recorded in the first quarter of this year.

Andy: We're on slide number 11, our wholesale brokerage segment had another good quarter with total revenues, increasing 11, 6% and organic growth of seven 1% the incremental.

Andy: Growing by 18, 2%.

Andy: These compare to total revenue growth of 12, 9% overall, we are extremely pleased with our results for 2024.

Andy: It'll expansion and total revenues in excess of organic was driven substantially by higher contingent commissions, our EBITDA margin decreased by <unk>.

Andy: Few of the comments regarding our capital structure cash generation and outlook.

Andy: From a cash perspective, we generated $1 $174 million of cash flow from operations growing 16, 2% over the prior year, our full year ratio of cash flow from operations as a percentage of total revenues remained strong at 24, 4%.

Andy: As a reminder.

Andy: Have also deferred the payment of approximately $90 million of federal income taxes for the third and fourth quarters of 2024 related to the IRS tax relief associated with the 2024 Hurricanes. These taxes are due to be paid in the second quarter of 2025.

Andy: During the quarter, we also drew down $250 million on our revolving credit facility in connection with the closing of the <unk> acquisition for.

Andy: For the full year, we continue to Delever and finished 2024 and a conservative position as our gross debt to EBITDA ratio is in line with our 10 year average.

Andy: We have a few comments regarding our outlook for 2025.

Andy: As it relates to contingent commissions based on what we know now we anticipate contingence for the full year of 2025 will be down slightly compared to 2020 for the unknown variables or the potential impact of the California wildfires and the outcome of the 2025 Atlantic Hurricane season.

Andy: For the retail division, we have two items. The first relates to the phasing of revenues between quarters based on the forecasted timing of net new business organic revenue growth for the first quarter is anticipated to be approximately 100 basis points lower than the organic growth for the other three quarters.

Andy: The second item relates to our recent acquisition of Quinn tests, and the phasing of its revenues and profit.

Andy: In the Netherlands, a substantial number of policies are placed in the first quarter of the year. As a result, we will record approximately 60% of <unk> annual revenues in the first quarter with the remaining revenues recognized fairly evenly over the following three quarters from a margin perspective, this will improve Q1.

As it relates to contingent commissions based on what we know now we anticipate contingence for the full year of 2025 will be down slightly compared to 2020 for the unknown variables or the potential impact of the California wildfires and the outcome of the $2 25 Atlantic Hurricane season.

Andy: <unk> and will unfavorably impact the margins in the other quarters from a full year perspective, we anticipate revenue and EBITDA to be within the ranges outlook during our August 2024 call.

For the retail division, we have two items. The first relates to the phasing of revenues between quarters based on the forecasted timing of net new business organic revenue growth for the first quarter is anticipated to be approximately 100 basis points lower than the organic growth for the other three quarters.

Andy: As it pertains to taxes, we expect our effective tax rate to be relatively consistent with 2024, it should be in the range of 24% 25%.

The second item relates to our recent acquisition of Quinn tests, and the phasing of its revenues and profit.

Andy: Based on the current outlook regarding interest rate cuts in 2025, we anticipate interest expense to be in the range of $170 million to $180 million for the full year in regard to interest income we anticipate this to be in the range of $65 million to $70 million given recent reductions in the benchmark.

In the Netherlands, a substantial number of policies are placed in the first quarter of the year. As a result, we will record approximately 60% of quintessence annual revenues in the first quarter with the remaining revenues recognized fairly evenly over the following three quarters from a margin perspective, this will improve Q1 <unk>.

Andy: Right in certain territories.

Andy: Finally, taking into consideration that net income in contingents will more than likely be down in 2025, we're expecting our adjusted EBITDA margins for 2025 to be relatively flat with that let me turn it back over to Powell for closing comments.

<unk> and will unfavorably impact the margins in the other quarters from a full year perspective, we anticipate revenue and EBITDA to be within the ranges outlook during our August 2024 call.

Andy: Thanks, Andy Great report from an economic standpoint, we expect the economies in which we operate continue to be stable and grow at levels similar to the second half of 'twenty. Four we believe this is a good backdrop for companies to grow and invest at moderate levels from a U S perspective. The main topics that most business leaders are watching include policy change.

As it pertains to taxes, we expect our effective tax rate to be relatively consistent with 2024, it should be in the range of 24% 25%.

Based on the current outlook regarding interest rate cuts in 2025, we anticipate interest expense to be in the range of $170 million to $180 million for the full year in regard to interest income we anticipate this to be in the range of $65 million to $70 million given recent reductions in the benchmark.

Andy: As from the new presidential administration, the outcomes of potential tariffs, the timing and trajectory of interest rates inflation and finally geopolitical matters.

Right in certain territories Phi.

Andy: Pending on the outcome of each it will influence the pace and intensity of investments in business growth for.

Finally, taking into consideration that net income in contingents will more than likely be down in 2025, we're expecting our adjusted EBITDA margins for 2025 to be relatively flat with that let me turn it back over to Powell for closing comments. Thanks.

Andy: For insurance pricing, we will provide our thoughts on rates for the first half of 2025 as too many things can change during the year, specifically timely extinguishment of the California wildfires will be critical and we're hopeful there will not be another large there will not be other large wildfires as the estimated losses or siggi.

Thanks, Andy Great report from an economic standpoint, we expect the economies in which we operate continue to be stable and grow at levels similar to the second half of 'twenty. Four we believe this is a good backdrop for companies to grow and invest at moderate levels from a U S perspective. The main topics that most business leaders are watching include policies.

Andy: <unk>.

Andy: Then depending on the magnitude of insured losses, there could be impacts on California pricing for both admitted and non admitted property subject to this outcome, we anticipate rates for admitted lines to be relatively similar or maybe moderate downward slightly versus their pricing in the second half of 2024.

Andy: Just from the new presidential administration, the outcomes of potential tariffs timing and trajectory of interest rates inflation, and finally geopolitical matters, depending on the outcome of each it will influence the pace and intensity of investments in business growth.

Andy: Across the country.

Andy: There'll be similar outliers that we talked about earlier for.

Andy: For the E&S markets. The discussion will really be split between cat property in all other lines, we expect rates for casualty and professional liability.

Andy: Insurance pricing, we will provide our thoughts on rates for the first half of 2025 as too many things can change during the year, specifically timely extinguishment of the California wildfires will be critical and we're hopeful that will not be another large there will not be other large wildfires as the estimated losses are.

Andy: Would it be similar to what they were in the second half of 'twenty for Cat property. We expect there will be additional downward pressure in rates as compared to pricing in the fourth quarter based on what we are seeing early indications in Q1, Q1 would lead us to believe that property rates could be down more than 20% based.

Andy: Again.

Andy: Then depending on the magnitude of insured losses, there could be impacts on California pricing for both admitted and non admitted property.

Andy: On construction quality and loss experience.

Andy: This outcome, we anticipate rates for admitted lines to be relatively similar or maybe moderate downward slightly versus or pricing in the second half of 2024.

Andy: On the M&A front, we feel good as we have a robust pipeline both domestically and internationally and are building relationships with lots of good companies as a result of some of the larger transactions last year, we're starting to see a moderation in multiples and the larger piggyback businesses from our perspective, we finished the year in a strong cash.

Andy: Across the country.

Andy: There'll be similar outliers that we talked about earlier.

Andy: For the E&S markets. The discussion will really be split between cat property in all other lines, we expect rates for casualty and professional liability.

Andy: And balance sheet position and have access to capital to deploy for companies that fit culturally and makes sense financially.

Andy: Be similar to what they were in the second half of 'twenty for Cat property. We expect there will be additional downward pressure in rates as compared to pricing in the fourth quarter.

Andy: We're looking forward to another successful year in 2025, our businesses are performing well as we are leveraging our collective capabilities to win more new business and help our existing customers achieve better results.

Andy: Based on what we are seeing early indications in Q1, Q1 would lead us to believe that property rates could be down more than 20% based on construction quality and loss experience.

Andy: Our market position is great as we will continue to leverage our solution selling model to win and retain more customers across our three segments with that I'll turn it back over to Michelle to open for Q&A.

Speaker Change: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced and to withdraw. Your question. Please press star. One again, we ask you to please limit to one question and if you have additional questions. Please return to the Q1 moment, while we.

Andy: And balance sheet position and have access to capital to deploy for companies that fit culturally and makes sense financially.

Andy: Compile the Q&A roster.

Speaker Change: And our first question is from Greg Peters with Raymond James Your line is now.

Andy: <unk>.

Speaker Change: Thank you and good morning, everyone.

Speaker Change: In your comments you spoke about net new business.

Speaker Change: And the success you had last year.

Speaker Change: I was wondering if you could and certainly certainly youre seeing it in retail I'm programs I was wondering if you could give us some perspective on.

Operator: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: Some of the drivers there.

Andy: To withdraw your question. Please press star one again, we ask you to please limit to one question and if you have additional questions. Please return to the Q1 moment, while we compile the Q&A roster.

And how your outlook is for 25 on net new business and how it compares with the industry and maybe inside that sort of map out for us, what California might do or how that might affect new business for you.

Andy: And our first question is from Greg Peters with Raymond James Your line is now.

Speaker Change: Next year.

Speaker Change: Good morning, Greg.

Speaker Change: A couple of things that I would just say broadly across the business and 24.

Andy: <unk>.

Andy: Sure.

Andy: Thank you and good morning, everyone.

Andy: In your comments you spoke about net new business.

Speaker Change: We wrote more new business than we ever have in all three of our divisions. So.

Andy: And the success you had last year.

Speaker Change: So we're really pleased with that number one.

Speaker Change: Number two we anticipate.

Speaker Change: Our ability to continue to do that.

Speaker Change: Cause of the capabilities.

Speaker Change: That we have and we've invested in both built and purchased.

Andy: And how your outlook is for 25 on net new business and how it compares with the industry and maybe inside that sort of map out for us, what California might do or how that might affect new business for you.

Speaker Change: And we are working really well together.

Speaker Change: As you know is a collaborative company to leverage.

Speaker Change: The capabilities to the benefit of all of our customers.

Andy: Next year.

Speaker Change: As it relates to California, and I think Thats a whole.

Andy: Good morning, Greg.

Andy: A couple of things that I would just say broadly across the business in 'twenty four we wrote more new business than we ever have and all.

Speaker Change: Kettle of fish onto itself I think there is a lot of variables there and so.

Speaker Change: Number one.

Speaker Change: The impact to the fair plan and in the event the losses are in excess of all <unk>.

Andy: Okay.

Andy: Number two we anticipate.

Speaker Change: Moneys accessible both surplus and reinsurance how do the assessments work that's a big question.

Andy: Our ability to continue to do that.

Andy: Cause of the capabilities.

Andy: That we have and we've invested in both built and purchased.

Speaker Change: Number two.

Speaker Change: The number of admitted carriers in the state today.

Andy: And we are working really well together.

Speaker Change: Today doing business.

Speaker Change: And the number of non admitted carriers will be impacted probably by the actions on a go forward basis.

Speaker Change: So the governor and the insurance Commissioner there R. R.

Speaker Change: Along with a difficult scenario, where they're trying to provide.

Speaker Change: And acceptable market availability of product with competitive pricing of that product and so at a very high level I would tell you that we believe that there is it would it would seem to us that it would be a massive expansion in.

Speaker Change: The E&S market.

Speaker Change: In that area, having said that many people not in our industry.

Speaker Change: Fully understand the impact of demand surge.

Speaker Change: And the need for quality contractors to rebuild.

Speaker Change: And I can't stress the importance of those two things because that drives pricing and the ability.

Speaker Change: Alrighty to respond that is independent of any regulatory or permitting actions.

Greg Peters: Greg are you still there, yes I am.

Speaker Change: Sorry.

Speaker Change: Michelle.

Speaker Change: Our next question comes from Robert Cox with Goldman Sachs.

Robert Cox: Hey, Thanks for taking my question.

Speaker Change: Yes curious just maybe start off with.

Robert Cox: Retail.

Robert Cox: Last quarter I think you all mentioned that the run rate going into the fourth quarter was about 5%.

Robert Cox: Is that still the run rate as we think about heading into next year.

Robert Cox: 125 million.

Robert Cox: Could you sort of size the impact to the retail organic this quarter from the nonrecurring item.

Robert Cox: Morning, Rob It's Andy here.

Robert Cox: Yes.

Robert Cox: Comment that we made in our prepared remarks regarding kind of timing as you know we've got a number of businesses that we can have comparable by quarters timing when kind of things come in some of our employee benefits businesses as well as bonds.

I'm sorry.

Michelle: Go ahead Michelle.

Speaker Change: Our next question comes from Robert Cox with Goldman Sachs.

Robert Cox: Hey, Thanks for taking my question.

Robert Cox: Yes curious just to maybe start off with.

Robert Cox: Businesses, such as those those can move around by quarters and then there is always just kind of timing of net new business, we think that probably impacted the organic by 40% to 60 basis points in the quarter. We will see that that will just come back over the coming quarters. It can move around by quarters, but nothing that gave us any underlying pause in there.

Robert Cox: Dale.

Robert Cox: Last quarter I think you all mentioned that the run rate going into the fourth quarter was about 5% is that still the run rate as we think about heading into next year or into $1 25 million.

Robert Cox: Could you sort of size the impact of the retail organic this quarter from the nonrecurring item.

Speaker Change: But we feel really good about momentum heading into 2025, and just how well the business is collaborating and would have been net new business as Paul talked about earlier.

Andy: Hey, Rob it's Andy here is.

Andy: The comment that we made in our prepared remarks regarding kind of timing is as you know we've got a number of businesses that we can have comparable by quarters timing when kind of things come in some of our benefits businesses as well as Bob.

Speaker Change: Okay. Thank you.

Speaker Change: On my follow up for the program segment.

Speaker Change: It seems like a lot of moving pieces I was just hoping you could talk about sort of the sustainability of the underlying organic growth in that segment into 2025 and also what does a normal run rate year of contingent commissions look like and programs.

Andy: <unk>.

Andy: Businesses, such as those those can move around by quarters, and then Theres always just kind of timing of net new business, we think that probably impacted the organic by 40 to 60 basis points in the quarter and we will see that that will just come back over the coming quarters. It can move around by quarters, but nothing that gave us any underlying clause in there, but we feel really.

Speaker Change: Do you want to answer the contingent.

Speaker Change: Yeah, Rob Let me let me take.

Speaker Change: Tianjin.

Speaker Change: First on it.

Speaker Change: As you know.

Speaker Change: We've had a we've had a really good year as well as fourth quarter on contingents and <unk>.

Andy: Good about momentum heading into 2025, and just how well the business is collaborating in winning net new business as Paul talked about earlier.

Speaker Change: And the programs businesses as well as obviously across.

Speaker Change: All of our.

Speaker Change: I think the one that had downward pressure during the year was in retail primarily primarily in personal lines, but I think as we head into 2025.

Andy: Okay. Thank you.

Andy: On my follow up for the program segment.

Speaker Change: We know we had some adjustments to calculations this year related to finalization of the contingent on 2023.

Speaker Change: So we think at least going into next year that will have probably some downward pressure pressure on contingents in that space.

Speaker Change: Do you want to answer the contingent yes.

Robert Cox: Yeah, Rob Let me, let me take contingence.

Andy: First on it as well.

Speaker Change: I think the other areas just kind of exactly how the losses play out in California, and how that May impact a couple of our programs, it's hard to tell right now.

Robert Cox: We've had a we've had a really good year as well as fourth quarter on contingents and <unk>.

Robert Cox: And the programs businesses as well as obviously across.

Robert Cox: So Robert on your other question if you think about.

Andy: All of our segments I think the one that had downward pressure during the year was in retail primarily primarily in personal lines, but I think as we head into 2025.

Speaker Change: Two of the components of the growth in programs this quarter.

Speaker Change: Had the increase well you had the total flood revenue and you had the $19 million.

Speaker Change: Reinsurance component and so if you think about NR program space a lot of growth in the last several years has been driven from wind and quake and some of our other larger programs and in those particular areas today, we're starting to see more rate pressure.

Andy: We know we had some adjustments to calculations this year related to finalization of the contingent on 2023.

Andy: So we think at least going into next year that will have probably some downward pressure pressure on contingence in in that space.

Speaker Change: So.

Andy: I think the other areas just kind of exactly how the losses play out in California, and how that May impact a couple of our programs, it's hard to tell right now.

Speaker Change: That does not mean, we don't think we can grow I'm not trying to give you that impression, but I think that you are seeing not only in programs, but kind of across the industry kind of a moderating of growth rates and so.

Robert Cox: So Robert on your other question if you think about.

Andy: Two of the components of the growth in programs this quarter.

Speaker Change: We don't give guidance as you know on organic growth in that area, but what I would say is we feel really good about our programs business.

Andy: Had.

Andy: Total flood revenue and you had the $19 million.

Andy: Reinsurance component and so if you think about NR program space a lot of growth in the last several years has been driven from wind and quake and some of our other larger programs and in those particular areas today, we're starting to see more rate pressure.

Speaker Change: Part of that is really driven by the results we have.

Speaker Change: We've delivered for our carrier partners.

Speaker Change: And their willingness to work with us and adjusting prices.

Speaker Change: Downward to remain competitive in the marketplace.

Speaker Change: Not easy.

Speaker Change: But we feel good about 25 and beyond for programs.

Andy: So.

Andy: That does not mean, we don't think we can grow I'm not trying to give you that impression, but I think that you're seeing not only in programs, but it kind of across the industry kind of a moderating of growth rates and so.

Rob: And then Rob also keep in mind.

Rob: Our our captive and we write a specific amount of premium inside of there and we're kind of hitting that we'll call. It that run rate now so we won't see that same amount of lift going into 'twenty five as we've.

Andy: We don't give guidance as you know on organic growth in that area, but what I would say is we.

Rob: We've seen over kind of 'twenty three 'twenty four it's performing very well, but we capitate that in order to limit the exposure.

Andy: We feel really good about our programs business.

Andy: Part of that is really driven by the results we.

Speaker Change: Thanks for all the color.

Andy: We've delivered for our carrier partners.

Rob: Thanks.

And our next question will come from Elyse Greenspan with Wells Fargo. Your line is open.

Andy: And their willingness to work with us and adjusting prices.

Speaker Change: Downward to remain competitive in the marketplace, it's not easy.

Elyse Greenspan: Hi, Thanks. My first question is on retail so it sounds like with some of the timing stuff that gets you right closer to the five which was the adjusted Q3 number as well Andy I know you pointed out right Q1, 1% better than the other three quarters of the year and I know you guys typically don't want it.

Speaker Change: But we feel good about 25 and beyond for programs.

Operator: And then Rob also keep in mind, our our captive right and we write a specific amount of premium inside of there.

Elyse Greenspan: Give forward guidance on that segment, but can you just help us think about triangulating that five maybe even just to the Q1, given this 1% headwind that youre pointing to is the right way to think that it's five less line just given the noise. We saw in the back half of 2024.

Speaker Change: We're kind of hitting that call at that run rate now so we won't see that same amount of lift going into 'twenty five as we've kept we've seen over kind of 'twenty three and 'twenty four it's performing very well, but we.

Andy: Capitate that in order to limit the exposure.

Andy: Thanks for all the color.

Speaker Change: I would like to answer that a lease so I know this frustrate you, but at the end of the day, we've said that our retail business.

Andy: <unk>.

Elyse Greenspan: And our next question will come from Elyse Greenspan with Wells Fargo. Your line is open.

Speaker Change: Hi, Thanks. My first question is on retail so it sounds like with some of the timing stuff that gets you right closer to the five which was the adjusted Q3 number as well Andy I know you pointed out Q1, 1% better than the other three quarters of the year and I know you guys typically don't want to give.

Speaker Change: Is a low to mid single digit organic growth business.

Speaker Change: So we're not going to give you the number but whatever the number is that you think as you said, we've articulated that we foresee a 100 bps headwind in Q1 that does not impact our overall outlook for the year.

Andy: Forward guidance on that segment.

Andy: Can you just help us think about triangulating that size, maybe even just to the Q1, given this 1% headwind that youre pointing to is the right way to think that it's five less one just given the noise. We saw in the back half of 2024.

Speaker Change: Or are giving you that guidance.

Speaker Change: <unk> Q1.

Speaker Change: Yes.

Speaker Change: So at least the easiest way to think that whatever number you have.

Speaker Change:

Speaker Change: On it so if it's a 456 whatever your number is you want to keep your full year number correct or keep it in line with where you are just adjust down the first quarter and then push up to the second third and fourth okay.

Speaker Change: I'd like to answer that a lease so I know this frustrate you, but at the end of the day, we've said that our retail business.

Andy: <unk> is a low to mid single digit organic growth business.

Speaker Change: And then with the margin guide might obviously programs might there was some headwind right from you obviously had greater flood related revenue and 24, then you're expecting 25, so I'm assuming that could be a margin headwind in that segment depending upon organic.

Andy: So we're not going to give you the number but whatever.

Andy: We've articulated that we foresee 100 bps headwind in Q1 that does not impact our overall outlook for the year. We just are are giving you that guidance.

Speaker Change: Other segments, I guess feel clean from just thinking about organic relative to margin expectation and then one just random one the corporate segment had like $11 million of negative EBITDA in the quarter I just wasn't sure what was flowing through there.

Andy: Relative to Q1.

Andy: So at least the easiest way to think that whatever number you have.

Speaker Change: Right.

Speaker Change: So I think the color that we gave on full year guidance at least who is on total company. We don't break it down by the individual segments and Youre right. I think two areas that we think will represent headwinds will be investment income and contingents.

Speaker Change: Depending upon what happens with storm claim activity. This year, we do have.

Speaker Change: Storm claim revenues in the first quarter.

Speaker Change: For it primarily first quarter and some over into the second quarter for for last year, we think at least with the headwinds that we know about on the contingents and investment income.

Speaker Change: The remainder of the business should perform pretty well next year again, there is always moving parts back and forth that should get total company.

Relatively flat on adjusted EBITDA margins.

Speaker Change: And then just the corporate in the Q4.

Speaker Change: We just had some one off cost in there in the fourth quarter nothing real unusual in nature. So.

Speaker Change: Those can always kind of move around by by quarters and by years, but nothing unusual.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Alex Scott: And the next question will come from Alex Scott with Barclays. Your line is open.

Alex Scott: Hi, first one I had for you is just to see if you could expand on some of the commentary you provided on the M&A environment.

Alex Scott: Just looking at some of your peers have done it seems like maybe the environments more ripe for larger scale M&A. If some of these private equity backed companies that have gotten maybe too big for the private markets.

Alex Scott: Are you seeing more of those types of opportunities in any.

Any way, we could think about.

Alex Scott: Your appetite in terms of how big could go.

Alex Scott: So good morning, Alex So as you know, we talk mostly about cultural fit first and foremost and then would it make sense financially.

Speaker Change: It's occurring in the market not.

Speaker Change: Not only last year, but this year and what we anticipate in years to come is exactly what we thought for some time.

Speaker Change: Two plus years ago, we started and I started talking about internally.

Speaker Change: <unk>.

Speaker Change: The potential for great.

Speaker Change: Solidago and in our industry in the next three to five to seven years and what <unk> seen is youre seeing parts of that the firms that were.

Speaker Change: Acquired last year, where all the larger ones were all private equity backed and there are other private equity backed firms out there that are seeking to buy other large private equity backed firms. There are other strategics that are thinking about or looking to buy the right firm.

Speaker Change: What we would tell you is we look at every individual opportunity on its own merits and so what we have done and we're very proud of is that we have been very conservative financially and paid down our debt when we make larger.

Speaker Change: <unk> to prepare us to make an investment of pretty much any size business that we might want to buy that doesn't mean, we're going to buy anything big or but we want the ability to do it if we find the right one.

So we feel really good about our positioning not only from the core business that we have.

Speaker Change: And the opportunity to do very good acquisitions on a standalone basis, and if a larger acquisition came along that fit culturally and made sense financially we would absolutely look at it.

Speaker Change: But.

Speaker Change: We feel really good about the business and where we're going.

Speaker Change: And.

Speaker Change: The most important thing is we want to have which we do.

Speaker Change: Ability to invest how we want to invest when we want to invest in our business.

Speaker Change: That's really helpful. Thanks.

Speaker Change: Next one I had is just on.

Speaker Change: Lender placed I wanted to get a sense for that.

Speaker Change: Business operate.

Speaker Change: More in sort of southeast Florida.

Speaker Change: Or do you have exposure to California, I'm, just trying to understand where we are in sort of the.

Speaker Change: Cycle.

Speaker Change: Non renewals and how that May impact lender placed I think Florida maybe were.

Speaker Change: Hopefully getting closer to the end of a.

Speaker Change: The challenging environment, where there are 11 non renewals, but in California. It seems like we're probably going into one right. So I'm just trying to understand.

Speaker Change: <unk>.

Speaker Change: Tougher going on that sort of thing.

Alex Scott: We will make it simple Alex the entire United States.

Alex Scott: That's clear alright.

Alex Scott: I'm not trying to be funny I'm, just telling you we have exposure everywhere.

Alex Scott: Understood that is what.

Alex Scott: I wanted to get at thank you.

Speaker Change: And our next question will come from Mark Hughes with <unk> Securities. Your line is open.

Yes. Thank you good morning.

Alex Scott: Morning.

Speaker Change: Andy I wanted to just make sure I'm thinking about the $19 million changed the reinsurance item.

Speaker Change: We think the impact on organic growth is the fact that you didn't have that item this year.

Speaker Change: $19 million good guide organic.

Speaker Change: And thats the way to calculate it.

Speaker Change: Yes, I think that would be fine market may remember, we last year in the fourth quarter since fourth quarter of 'twenty three.

Speaker Change: Took that adjustment for the change in the treatment. So that was a negative impact to our organic in the fourth quarter of last year.

Speaker Change: And now we're on a comparative basis, so its not like Youre going to see next year that it's a difficult comp it's already in there. So it will be comparable to comparable Q4, 2000 and for Q4, 24% Q4 'twenty five.

Speaker Change: Understood.

Paul: And then Paul you had mentioned.

Speaker Change: I guess in Florida, you got the <unk>.

Speaker Change: Our experience with the need for quality contractors to rebuild do you have any observations about the supply of quality contractors in California.

Speaker Change: Well.

Speaker Change: This would be purely speculative mark but the answer is based on the magnitude of the losses there cannot.

Speaker Change: Humanly possible be enough contractors I'm not trying to be funny, but I'm, just saying the demand will be so massive.

Speaker Change: And one of the things that Ive been told please don't quote me on this but.

Speaker Change: Is that getting a permit to build a home.

Speaker Change: Can take up to a year and a half.

Speaker Change: So I believe that the governor.

Speaker Change: And the rest of the elected officials there will need to do something that will be more.

Speaker Change: Thoughtful in terms of expediting the rebuild.

Speaker Change: So think of something on a much larger scale, which would allow them to expedite.

Speaker Change: Construction.

Speaker Change: <unk>, So let me.

Speaker Change: Lead you down the path of something like the Marshall plan.

Speaker Change: Very good thank you.

Speaker Change: Yes.

Speaker Change: And our next question will come from Michael Zarinsky with BMO. Your line is open.

Speaker Change: Hey, Thanks. This is Charlie on for Mike, maybe just going back to the flattish margin expectations can.

Speaker Change: Can you just provide some color on what the drivers of margin expansion that could continue into the next slide revenues.

Speaker Change: It will likely be lower.

Speaker Change: Is it more operating expenses comp and Ben as it.

Speaker Change: Just the operating leverage driving that or is there anything.

Speaker Change: Or you can catch on.

Charlie: Hey, good morning, Charlie.

Speaker Change: It's really around operating leverage again remember we run hundreds of businesses.

Speaker Change: Across the platform. So we're always looking to try to make sure we grow profitably but also.

Speaker Change: We invest in our businesses at different times. So it's not like each one of them grows the exact same percentage and delivers the exact same profit there is theres a lot of moving parts inside the organization. So we're just trying to kind of make it relatively simple for the outside world as to how we see all the moving parts and well.

Speaker Change: We will get some benefits of the investments we made in previous years, and we will make some more investments in the current year and in different areas.

Speaker Change: Got it thank you.

Speaker Change: And then I guess for my follow up.

We've seen some data showing.

Speaker Change: Relatively significant population out of citizens into the private market in Florida.

Speaker Change: Is that materially expecting or impacting your guidance.

Speaker Change: See that having an impact.

Speaker Change: Based on the different commission structures there.

Speaker Change: No.

Speaker Change: Okay. Thank you.

Speaker Change: And the next question will come from Deane, Chris <unk> with <unk>. Your line is open.

Speaker Change: Yes.

Speaker Change: Hi, I was wondering if the decelerating pricing in property and by customer shopping or in <unk>.

Speaker Change: Are you seeing.

Speaker Change: Pretty accounts migrate forward.

Speaker Change: The wholesale market.

Speaker Change: Absolutely not.

Speaker Change: So let me let me just.

Speaker Change: Dean explain.

Speaker Change: The dynamics, there and in an extreme example, but a real one.

Speaker Change: You are an owner of <unk>.

Speaker Change: Cold storage warehouses in Florida, there are 50 million dollar.

Speaker Change: Total insured values and you have one in Miami.

Speaker Change: You have one in Naples.

Speaker Change: One in Tampa and you've got one in Jacksonville.

Speaker Change: And for the last five years or more but in for the last five years. Your insurance premium has gone up every year.

Speaker Change: And in some instances substantially.

Speaker Change: And so.

Speaker Change: You too.

Speaker Change: Are you you're not feeling so good about insurance Unfortunately.

Speaker Change: And so.

Speaker Change: One of two things happens you want to make sure that you are broker is doing the right thing and either we will bring you what the market will bear and in this case the market will bear typically downward pressure on rates.

Speaker Change: But.

Speaker Change: I would tell you that.

Speaker Change: Any way a property owner or manager can save money, particularly in light of five years of upward pressure. They are looking to try to capture that because they're a little bit kind of.

Speaker Change: It's like a really they are just worn out with it.

Speaker Change: And so.

Speaker Change: And I believe that people.

Speaker Change: Understand that add an intellectual level, but I don't think people understand it at an emotional level and so having said that everybody is different but I'm just saying there is a lot in there.

Speaker Change: So we write a lot of business that way and we have to face competition in many instances that way we have to earn the respect and trust of our customers every day.

Speaker Change: But please don't think that.

Speaker Change: That there is this this is a ultra competitive market, where there is angst.

Speaker Change: And there is a more emotion around that buying decision then you can imagine.

Speaker Change: Got it yeah that makes sense.

Speaker Change: So staying on the topic of submission, but moving to casually sort of given that trajectory right.

Speaker Change: Including Behr.

Speaker Change: Can you kind of just talk about the impact that's having on casualty lines submission growth into the the wholesale line.

Speaker Change: It depends on what lines that youre talking about here's here's what I would say there is still a net inflow into the E&S market today.

Speaker Change: In aggregate. Okay. So there are more accounts flowing in today than there have been and we think that that in the near to intermediate term will continue to occur.

Speaker Change: That said the.

Speaker Change: When we say casualty casually could be automobile that's an admitted lineup and.

Speaker Change: And we continue to see rate increases dean on automobile on a regular and recurring basis.

Speaker Change: So I know I think what you are trying to do is trying to figure out is it going into wholesale versus.

Speaker Change: The retail or both or whatever the case might be the answer is we're seeing more submissions in the wholesale than we have so increasing submissions increasing written business in the non admitted market and that is it.

Speaker Change: Exacerbated by events, some of which you read about.

Speaker Change: And some may be you don't read about but it is areas that people become more and more uncomfortable with that could be hypothetically.

Speaker Change: Hypothetically convective storms in places like Oklahoma, and Nebraska and Kansas.

Speaker Change: Things were there.

Speaker Change: They might have been in the admitted property market for a long time and or the admitted property market wants massive deductibles or it goes into the E&S market.

Speaker Change: So I know that I'm talking property, but the same concept applies with casualty.

Speaker Change: So.

Speaker Change: But the wholesale market continues to expand.

Speaker Change: And Deane, we talked about selling a couple of calls the thing to keep in mind that you always have to look about her.

Speaker Change: Now the buyer thinks about it while they are focused on rate online what they are really focused on is their premium.

Speaker Change: And theyre trying to figure out how to balance the premium because ultimately they got they got cut a check for that amount and so theyre trying to figure out what's the right balance with their their retention that they want to keep through deductibles et cetera, what limits do they want to buy theyre going to move or other exclusions et cetera, theyre going to move all of that around in.

Speaker Change: Order to figure out the premium so youre not going to see that if rates go up fiber down five.

Speaker Change: Going to be a direct correlation in our commissions or potentially even direct correlation into the premium that the customer pays okay.

Speaker Change: Okay. Thank you okay.

Scott: And our next question comes from Scott <unk> with.

Speaker Change: RBC capital markets. Your line is open.

Speaker Change: Yes. Good morning, just wondering if you could talk about some of the organic hiring you've done in 2024 in the past few years kind of.

Speaker Change: How thats, how thats stacked up anything you can share on that and has that been a big driver behind the organic growth just just curious what's going on behind the scenes or in terms of.

Speaker Change: That part outside of M&A.

Speaker Change: So Scott we don't.

Speaker Change: We don't discuss in detail how we hire.

Speaker Change: Teammates. However, I would tell you that we have been actively hiring for the last several years and through Covid in that regard.

Speaker Change: And thats teammates in all positions <unk>.

Speaker Change: Service teammates.

Speaker Change: Marketing teammates production teammates.

Speaker Change: Claims adjusting teammates all types of teammates.

Speaker Change: And so we look at it.

Speaker Change: As we want the best athletes on the team and so we're it's the best athlete routine we hire people from other industries that have made very very successful transitions into our industry, we hire people with insurance background.

Speaker Change: That could be carrier background or from other firms and we obviously get a lot of very talented people through our acquisitions, but yes.

Speaker Change: We're very pleased with the acquisition I mean, the hiring of new teammates that we have made an addition to the acquisitions we made last year.

Speaker Change: Okay. That's helpful. And then just on the captive business I know you guys had guided to last quarter $5 million to $10 million of claims cost what does that come in for the quarter was it within that range or.

Speaker Change: How did what was the do you have that number.

Speaker Change: Good morning, Scott, Yes, it was in that range, yes.

Speaker Change: Okay, and then I guess the only a question just on the comp as was just to clarify. So you are saying you still see growth for 2025 and <unk> just not at the same rate as before was that was that the comment that you had made before.

Speaker Change: Correct, yes, because remember if you will we write a target amount of premium in there.

Speaker Change: Again, there is more complexity behind but that will we're just about a run rate there yeah. Okay. Thanks.

Speaker Change: And the next question comes from Michael Zielinski with BMO. Your line is open.

Michael Zielinski: Hey, thanks.

Michael Zielinski: One quick follow up just curious sorry, if I missed it.

Michael Zielinski: If you can touch on where the contingent kind of landed for Helene and Milton if there were any.

Michael Zielinski: Adjustments in the quarter adjustments you expect in the first quarter.

Mike: Hi, Mike.

Michael Zielinski: Charlie.

Michael Zielinski: Sorry, that's right you've got charter, we can step in and therefore for Mike is.

Michael Zielinski: We had some adjustments back in the third quarter.

Michael Zielinski: For <unk>.

Michael Zielinski: Halloween and then we had some adjustments in the fourth quarter four for Milton nothing significant that we called out ultimately.

Michael Zielinski: Ultimately, we've got to see how loss development plays out there.

Michael Zielinski: And what that might mean for for 25, and I think thats why we used to have a little bit of cautionary outlook on those as well as what happens in California.

Alex Scott: Thanks Scott.

Okay. Thank you.

Alex Scott: This does conclude the Q&A session I would now like to turn it back over to Powell Brown for closing remarks.

Alex Scott: Thanks, Michele wanted to thank everybody for your time today, we are really pleased with the performance of our business last year and equally excited about 2025, there are a lot of cool things going on at Brown <unk> Brown as you can tell and.

Alex Scott: I've said this before but I am pumped on our performance last year and equally feel the same way about 2025 and beyond hope you all have a nice day and we look forward to talking to you next quarter.

Alex Scott: This concludes today's conference call. Thank you for participating you may now disconnect.

Q4 2024 Brown & Brown Inc Earnings Call

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