Q2 2026 Brown & Brown Inc Earnings Call

Speaker #1: And welcome to "Brown & Brown Ink," Q2 earnings. 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 connection 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.

Speaker #1: Such statements reflect our current views and respect of future events, including those relating to the company's anticipated financial results for the Q2. And our intended to fall within the Safe Harbor provisions of the Security Laws.

Speaker #1: Good morning, and welcome to BROWN & BROWN, INC. Q4 earnings 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 connection 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.

Speaker #1: 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 the number of factors, such factors include the company's determination as it finalizes its financial results for the Q2, that its financial results differ from the current preliminary unaudited number set forth in the press release issued yesterday.

Speaker #1: Such statements reflect our current views and respect of future events, including those relating to the company's anticipated financial results for the second quarter, and are intended to fall within the safe harbor provisions of the securities laws.

Speaker #1: 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 with the Security and Exchange Commission.

Speaker #1: 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 second quarter, that its financial results differ from the current preliminary, unaudited numbers set forth in the press release issued yesterday.

Speaker #1: Additional discussion of these and other factors affecting the company's business or prospects, as well as additional information regarding forward-looking statements is contained in the slide presentation posted in connection with the call and in the company's filings with the Security and Exchange Commission.

Speaker #1: We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, we there are certain non-GAAP financial measures used in this conference call.

Speaker #1: 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 with the Securities and Exchange Commission.

Speaker #1: A reconciliation of any non-GAAP financial measures to the most comparable GAAP financial measures can be found in the company's earning press release or in the investor presentation for this call on the company's website at bbrown.com by clicking on "Investor Relations" and then "Calendar of Events." With that said, I would now like to turn the call over to Pal Brown, President and Chief Executive Officer.

Speaker #1: Additional discussion of these and other factors affecting the company's business or prospects, as well as additional information regarding forward-looking statements, is contained in the slide presentation posted in connection with the call and in the company's filings with the Securities and Exchange Commission.

Speaker #1: We disclaim any intention or 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.

Speaker #1: You may begin.

Speaker #2: Thank you, Michelle, and good morning, everybody. And welcome to our Q2 earnings call. Before we get into our performance for the quarter, which we're pleased with, I'd like to touch on several topics that many investors are asking about our business and about the industry.

Speaker #1: A reconciliation of any non-GAAP financial measures to the most comparable GAAP financial 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 bbrown.com, by clicking on "Investor Relations" and then "Calendar of Events." With that said, I would now like to turn the call over to Pal Brown, President and Chief Executive Officer.

Speaker #2: First, we're very focused on our organic growth with and without contingents. Please keep in mind our organic growth with contingents is a closer comparison to the other brokers as most do not break out their contingent commissions.

Speaker #2: This is why we added the additional performance metrics starting in 2026. We want to evaluate organic on both a quarterly and a year-to-date basis as contingents will fluctuate when compared to prior quarters or prior years.

Speaker #1: You may begin.

Speaker #2: Thank you, Michelle, and good morning, everybody. Welcome to our second-quarter earnings call. Before we get into our performance for the quarter, which we're pleased with, I'd like to touch on several topics that many investors are asking about—our business and about the industry.

Speaker #2: Second, capital allocation. We remain focused on hiring talented people to help us grow our business organically to $8 billion and beyond. Next, we're focused on buying back our stock.

Speaker #2: First, we're very focused on our organic growth, both with and without contingents. Please keep in mind, our organic growth with contingents is a closer comparison to the other brokers, as most do not break out their contingent commissions.

Speaker #2: We continue to view share repurchases as an attractive use of capital at the present time. Finally, we're looking at acquisitions that are strategic in nature, not solely for scale.

Speaker #2: This is why we added the additional performance metric starting in 2026. We want to evaluate organic on both a quarterly and a year-to-date basis, as contingents will fluctuate when compared to prior quarters or prior years.

Speaker #2: Third, you probably saw our announcements regarding our new partnerships with McKinsey, Accenture, and Anthropic. These partners are helping us accelerate the work we've already done with AI and helping us think more broadly pertaining to the holistic application of these solutions.

Speaker #2: Second, capital allocation. We remain focused on hiring talented people to help us grow our business organically to $8 billion and beyond. Next, we're focused on buying back our stock.

Speaker #2: We believe new technologies and AI will enable our teammates. We're focused on better customer outcomes and assisting our teammates with the ability to go to market faster, be more efficient, and be better prepared.

Speaker #2: We continue to view share repurchases as an attractive use of capital at the present time. Finally, we're looking at acquisitions that are strategic in nature, not solely for scale.

Speaker #2: We'll get into more detail about AI later in the conversation. Now, let's pivot to our results. We're pleased with our financial performance for the quarter, which came in modestly ahead of our expectations, even with continued pressure from declining cap property rates.

Speaker #2: Third, you probably saw our announcements regarding our new partnerships with McKinsey, Accenture, and Anthropic. These partners are helping us accelerate the work we've already done with AI and helping us think more broadly regarding the holistic application of these solutions.

Speaker #2: This performance reflects the efforts of our exceptional team of professionals and their passion to deliver risk management solutions for our customers. I'll provide some comments regarding our performance.

Speaker #2: We believe new technologies and AI will enable our teammates. We're focused on better customer outcomes and assisting our teammates with the ability to go to market faster, be more efficient, and be better prepared.

Speaker #2: The insurance markets and our customers. Then Andy will discuss our financial performance in more detail. Lastly, I'll wrap up with some closing thoughts regarding the second half, as well as technology, before we open up the call for Q&A.

Speaker #2: We'll get into more detail about AI later in the conversation. Now, let's pivot to our results. We're pleased with our financial performance for the quarter, which came in modestly ahead of our expectations, even with continued pressure from declining cap property rates.

Speaker #2: I'm on slide 4. For the Q2, we delivered revenues of $1.7 billion, growing 30.4% in total. Organic revenue decreased 70 basis points from the prior year, and increased 70 basis points when including organic contingents.

Speaker #2: This performance reflects the efforts of our exceptional team of professionals and their passion to deliver risk management solutions for our customers. I'll provide some comments regarding our performance.

Speaker #2: We view this as a good result given the Q2 as the largest quarter of the year for cap property placements. Our adjusted EBITDA margin decreased 100 basis points to 35.7, and our adjusted earnings per share grew nearly 4% to $1.07.

Speaker #2: The insurance markets and our customers. Then Andy will discuss our financial performance in more detail. Lastly, I'll wrap up with some closing thoughts regarding the second half, as well as technology, before we open up the call for Q&A.

Speaker #2: Through the first 6 months of 2026, we generated good cash flow from operations and repurchased additional shares during the quarter. Lastly, we acquired 6 small agencies.

Speaker #2: I'm on slide 4. For the second quarter, we delivered revenues of $1.7 billion, growing 30.4% in total. Organic revenue decreased 70 basis points from the prior year and increased 70 basis points when including organic contingents.

Speaker #2: I'm on slide 5. From an economic standpoint, conditions during the Q2 remained relatively consistent, with previous quarters. Customer spending patterns were stable overall, and most customers continued to take a fairly neutral position towards hiring and investment.

Speaker #2: We view this as a good result, given the second quarter is the largest quarter of the year for cap property placements. Our adjusted EBITDA margin decreased 100 basis points to 35.7%, and our adjusted earnings per share grew nearly 4% to $1.07.

Speaker #2: We're seeing a relatively stable labor environment, with capital investment decisions remaining modest across most of the economy. Depending on the industry, some customers are growing substantially and others are contracting.

Speaker #2: Through the first six months of 2026, we generated good cash flow from operations and repurchased additional shares during the quarter. Lastly, we acquired six small agencies.

Speaker #2: At the same time, we're seeing some positive audit premium activity, which suggests many businesses continue to grow. Based on conversations with our customers during the quarter, the primary areas they continue to monitor are inflation, oil prices, and the broader geopolitical matters.

Speaker #2: I'm on slide 5. From an economic standpoint, conditions during the second quarter remained relatively consistent with previous quarters. Customer spending patterns were stable overall, and most customers continued to take a fairly neutral position toward hiring and investment.

Speaker #2: Those issues are influencing sentiment, but at this point, we've not seen a material change in overall activity levels. From a commercial insurance pricing standpoint, rate changes in the Q2 will broadly consistent with the Q1.

Speaker #2: We're seeing a relatively stable labor environment, with capital investment decisions remaining modest across most of the economy. Depending on the industry, some customers are growing substantially and others are contracting.

Speaker #2: With some additional moderation in certain lines, in the admitted market, rates were substantially in line with the Q1 of '26. Workers' comp and non-cap property were generally flat to down 5.

Speaker #2: At the same time, we're seeing some positive audit premium activity, which suggests many businesses continue to grow. Based on conversations with our customers during the quarter, the primary areas they continue to monitor are inflation, oil prices, and broader geopolitical matters.

Speaker #2: For casualties, the market is different for primary versus excess. Primary casualty and professional liability are generally up 5%, while excess layers in casualty experience more rate pressure.

Speaker #2: Those issues are influencing sentiment, but at this point, we've not seen a material change in overall activity levels. From a commercial insurance pricing standpoint, rate changes in the second quarter were broadly consistent with the first quarter.

Speaker #2: In the property cap rates continue to decrease 15% to 35%, which is similar to the Q1. As we've said before, there's always exception to the conditions for cap property remain favorable for our customers.

Speaker #2: With some additional moderation in certain lines, in the admitted market, rates were substantially in line with the first quarter of '26. Workers' comp and non-cap property were generally flat to down 5%.

Speaker #2: There continues to be a significant amount of capital seeking to underwrite risk with supply exceeding demand. Certain customers are benefiting from lower pricing environment and capturing savings, while others are redirecting the savings to change their structures, limits, or deductibles.

Speaker #2: For casualties, the market is different for primary versus excess. Primary casualty and professional liability are generally up 5%, while excess layers in casualty experience more rate pressure.

Speaker #2: For employee benefits, pricing trends were similar to the Q1. Medical costs remain up 8% to 10%, and pharmacy costs were up again over 10%.

Speaker #2: In the property cap rates continue to decrease 15 to 35%, which is similar to the first quarter. As we've said before, there's always exception to the ranges.

Speaker #2: Those cost pressures continue to create demand for our advisory and consulting capabilities as customers look for strategies to better manage healthcare and primary costs.

Speaker #2: But overall, market conditions for cap property remain favorable for our customers. There continues to be a significant amount of capital seeking to underwrite risk, with supply exceeding demand.

Speaker #2: Overall, when we step back and look at both the economy and the insurance market, customers are still operating with discipline and they're growing modestly.

Speaker #2: Certain customers are benefiting from the lower pricing environment and capturing savings, while others are redirecting the savings to change their structures, limits, or deductibles. For employee benefits, pricing trends were similar to the first quarter.

Speaker #2: Insurance market remains competitive for many lines, while casualty pressure is persists. In these market conditions, we believe our capabilities position us well to help customers navigate the market.

Speaker #2: Medical costs remain up 8% to 10%, and pharmacy costs were up again over 10%. Those cost pressures continue to create demand for our advisory and consulting capabilities, as customers look for strategies to better manage healthcare and pharmacy costs.

Speaker #2: I'm on slide 6. Let's transition to the performance of our two segments for the Q2. Retail delivered organic growth, including contingents of 2.5% and 1.5%, excluding contingents.

Speaker #2: These growth rates were slightly above our expectations as the net new business was better and contingent commissions were particularly strong. Our enhanced go-to-market sales model is building momentum with newly aligned teams collaborating, developing opportunities, and generating incremental new business wins that leverage our collective capabilities.

Speaker #2: Overall, when we step back and look at both the economy and the insurance market, customers are still operating with discipline, and they're growing modestly.

Speaker #2: The insurance market remains competitive for many lines, while casualty pressure persists. In these market conditions, we believe our capabilities position us well to help customers navigate the market.

Speaker #2: While the organic growth for retail is improving, it's not where we want it to be yet. Our team has been working hard to combine two large organizations and we're making good progress to deliver improving organic growth over the coming quarters.

Speaker #2: I'm on slide 6. Let's transition to the performance of our two segments for the second quarter. Retail delivered organic growth, including contingents, of 2.5%, and 1.5% excluding contingents.

Speaker #2: I have confidence in our team. Turning to specialty distribution, for the quarter, organic revenue was negative 1.6 with contingents and negative 3.5 without. These organic revenue metrics were negatively impacted by nearly 200.

Speaker #2: These growth rates were slightly above our expectations, as the net new business was better and contingent commissions were particularly strong. Our enhanced go-to-market sales model is building momentum with newly aligned teams collaborating, developing opportunities, and generating incremental new business wins that leverage our collective capabilities.

Speaker #2: Basis points due to approximately 10 million of delayed new business revenue for one of our programs. This revenue is expected to be recorded substantially in the Q3.

Speaker #2: While the organic growth for retail is improving, it's not where we want it to be yet. Our team has been working hard to combine two large organizations, and we're making good progress to deliver improving organic growth over the coming quarters.

Speaker #2: Taking this timing into consideration and the downward pressure on cap property rates, the results for the quarter were in line with our expectations. Similar to the last quarter, we received a large volume of submissions, expanded our underlying policies in force, and there's another great quarter for contingents.

Speaker #2: I have confidence in our team. Turning to specialty distribution, for the quarter, organic revenue was negative 1.6% with contingents and negative 3.5% without. These organic revenue metrics were negatively impacted by nearly 200 basis points due to approximately $10 million of delayed new business revenue for one of our programs.

Speaker #2: We view this as a reflection of the quality of our capabilities and underwriting discipline as we're growing our base customers. Now I'd like to turn it over to Andy to discuss our financial results in more detail.

Speaker #3: Thank you, Phil. Good morning, everybody. I'll dive deeper into our consolidated results and certain non-gap measures. As a reminder, when we refer to EBITDA, EBITDA margin, income before income taxes are diluted net income per share.

Speaker #2: This revenue is expected to be recorded substantially in the third quarter. Taking this timing into consideration and the downward pressure on cap property rates, the results for the quarter were in line with our expectations.

Speaker #3: We're referring to those measures on an adjusted basis. We're over on slide number 7. On a consolidated basis, we deliver total revenues of $1.7 billion.

Speaker #2: Similar to the last quarter, we received a large volume of submissions, expanded our underlying policies in force, and it’s another great quarter for contingents.

Speaker #3: Growing 30.4% as compared to the Q2 of 2025. Contingent commissions grew by an impressive $40 million with $24 million coming from accession. The underlying organic increase, which was driven by minimal storm claim activity and higher underwriting profitability.

Speaker #2: We view this as a reflection of the quality of our capabilities and underwriting discipline as we're growing our base of customers. Now, I'd like to turn it over to Andy to discuss our financial results in more detail.

Speaker #3: Thank you, Phil. Good morning, everybody. I'll dive deeper into our consolidated results and certain non-GAAP measures. As a reminder, when we refer to EBITDA, EBITDA margin, income before income taxes, or diluted net income per share…

Speaker #3: Primarily within our specialty distribution segment. Additionally, retail had a good quarter for contingents due to our enhanced carrier engagement model. Income before income taxes increased by 17.4% and EBITDA grew by 27%.

Speaker #3: We're referring to those measures on an adjusted basis. We're over on slide number 7. On a consolidated basis, we delivered total revenues of $1.7 billion.

Speaker #3: Our EBITDA margin was 35.7% of 100 basis points, decreased from the Q2 of the prior year. This was driven substantially by lower interest income as compared to the Q2 of last year, when we were holding cash.

Speaker #3: Growing 30.4% as compared to the second quarter of 2025. Contingent commissions grew by an impressive $40 million, with $24 million coming from a session.

Speaker #3: Anticipation of a purchasing accession. Regarding accession, we recognize total revenues of approximately $410 million for the quarter and margins were in line with our expectations.

Speaker #3: The underlying organic increase was driven by minimal storm claim activity and higher underwriting profitability, primarily within our Specialty Distribution segment. Additionally, Retail had a good quarter for contingents due to our enhanced carrier engagement model.

Speaker #3: During the quarter, we also disposed of a non-core retail business with non-recurring annual revenues of approximately. To $35 million. Our effective tax rate for the quarter was 24.6%, slightly below the Q2 of 2025.

Speaker #3: Income before income taxes increased by 17.4%, and EBITDA grew by 27%. Our EBITDA margin was 35.7%, which is a decrease of 100 basis points from the second quarter of the prior year.

Speaker #3: Diluted net income per share increased 3.9% to $1.07. Our weighted average shares outstanding increased by approximately $41 million to $334 million. Primarily due to shares issued in connection with the acquisition of accession.

Speaker #3: This was driven substantially by lower interest income as compared to the second quarter of last year, when we were holding cash in anticipation of a purchasing accession.

Speaker #3: Regarding Accession, we recognized total revenues of approximately $410 million for the quarter, and margins were in line with our expectations. During the quarter, we also disposed of a non-core retail business with non-recurring annual revenues of approximately $30 to $35 million.

Speaker #3: This increase was partially offset by approximately $9 million shares we repurchased over the last 9 months. Lastly, our dividends paid per share increased by 10% as compared to the Q2 of 2025.

Speaker #3: We're moving over to slide number 8. The retail segment grew total revenues by 35.9%. This expansion was driven primarily by acquisition activity over the past year and organic growth, including contingents of 2.5%.

Speaker #3: Our effective tax rate for the quarter was 24.6%, slightly below the second quarter of 2025. Diluted net income per share increased 3.9% to $1.07.

Speaker #3: Our weighted average shares outstanding increased by approximately $41 million to $334 million. Primarily due to shares issued in connection with the acquisition of accession.

Speaker #3: Regarding our previously discussed pharmacy consulting business, the negative impact on organic growth was approximately 60 basis points for this quarter. Regarding the litigation impact, associated with individuals who left and joined the startup broker, the current period adjustment to organic revenue was $18 million.

Speaker #3: This increase was partially offset by approximately 9 million shares we repurchased over the last nine months. Lastly, our dividends paid per share increased by 10%, as compared to the second quarter of 2025.

Speaker #3: The increase for the first quarter was primarily driven by the impact of earning lower incentive commissions which we adjusted on a year-to-date basis. Based on currently available information, we anticipate the full year 2026 revenue impact related to new and lost business, as well as incentives, to be in the range of 50 to 60 million dollars.

Speaker #3: We're moving over to slide number 8. The Retail segment grew total revenues by 35.9%. This expansion was driven primarily by acquisition activity over the past year and organic growth, including contingents of 2.5%.

Speaker #3: Regarding our previously discussed pharmacy consulting business, the negative impact on organic growth was approximately 60 basis points for this quarter. Regarding the litigation impact associated with individuals who left and joined the startup broker, the current period adjustment to organic revenue was $18 million.

Speaker #3: Our EBITDA margin was strong, expanding 230 basis points from the Q2 of last year. This increase was driven by higher contingents discipline expense management and the impact of synergies.

Speaker #3: During the quarter, we realized an expense benefit of approximately $110 basis points for certain one-time accrual adjustments. Lastly, there was a net benefit to our margins of approximately 30 to 50 basis points due to individuals that departed to the startup broker.

Speaker #3: The increase for the first quarter was primarily driven by the impact of earning lower incentive commissions, which we adjusted on a year-to-date basis.

Speaker #3: Based on currently available information, we anticipate the full-year 2026 revenue impact related to new and lost business, as well as incentives, to be in the range of $50 to $60 million.

Speaker #3: We continue to expect this benefit will moderate over the coming quarters as we hire new teammates. We're moving over to slide number 9. Specialty distribution grew total revenues by 28.1%, driven by the acquisition of accession and increased contingent commissions.

Speaker #3: Our EBITDA margin was strong, expanding 230 basis points from the second quarter of last year. This increase was driven by higher contingent discipline, expense management, and the impact of synergies.

Speaker #3: The higher contingents of $21 million were driven by $12 million of acquisition activity and $9 million from favorable underwriting performance. Our EBITDA margin decreased 400 basis points to 42.7%, primarily due to lower organic growth and investments in our European capabilities to support incremental growth opportunities which more than offset higher contingent commissions.

Speaker #3: During the quarter, we realized an expense benefit of approximately 110 basis points for certain one-time accrual adjustments. Lastly, there was a net benefit to our margins of approximately 30 to 50 basis points due to individuals that departed to the startup broker.

Speaker #3: We continue to expect this benefit will moderate over the coming quarters as we hire new teammates. We're moving over to slide number 9. Specialty Distribution grew total revenues by 28.1%, driven by the acquisition of Accession and increased contingent commissions.

Speaker #3: We have a few other comments. Regarding cash flow and our balance sheet, we generated approximately $610 million of cash flow from operations increasing $70 million for 13% compared to the first half of 2025.

Speaker #3: The higher contingents of $21 million were driven by $12 million of acquisition activity and $9 million from favorable underwriting performance. Our EBITDA margin decreased 400 basis points to 42.7%, primarily due to lower organic growth and investments in our European capabilities to support incremental growth opportunities, which more than offset higher contingent commissions.

Speaker #3: Our ratio of cash flow from operations to total revenues was 17% for the first 6 months of this year, as compared to 20% in the first half of last year.

Speaker #3: The current year's cash flow conversion ratio was negatively impacted by two items related to accession. The first was for non-recurring related items, with the largest component being higher than anticipated final earn-out payments.

Speaker #3: We have a few other comments. Regarding cash flow and our balance sheet, we generated approximately $610 million of cash flow from operations, increasing $70 million, or 13%, compared to the first half of 2025.

Speaker #3: The second item was the timing of working capital during the first and second half of the year. Isolating these items, our underlying cash flow was strong.

Speaker #3: Lastly, during the past 6 months, we deployed $500 million to repurchase approximately $8 billion of our shares. We continue to anticipate strong cash generation for the remainder of the year and will balance our deployment of capital between hiring people to help us grow, organically, share repurchases, deleveraging, and M&A.

Speaker #3: Our ratio of cash flow from operations to total revenues was 17% for the first six months of this year, as compared to 20% in the first half of last year.

Speaker #3: The current year's cash flow conversion ratio was negatively impacted by two items related to accession. The first was for non-recurring related items, with the largest component being higher-than-anticipated final earn-out payments.

Speaker #3: Regarding the outlook for the second half of the year, we continue to believe organic growth will improve in both divisions and are anticipating retail's organic growth, excluding contingents, to be in the range of 1.5% to 2.5%, and organic growth for specialty distribution to be in the range of 2% to 4%, excluding contingent commissions.

Speaker #3: The second item was the timing of working capital during the first and second half of the year. Isolating these items, our underlying cash flow was strong.

Speaker #3: Lastly, during the past six months, we deployed $500 million to repurchase approximately 8 million of our shares. We continue to anticipate strong cash generation for the remainder of the year and will balance our deployment of capital between hiring people to help us grow organically, share repurchases, deleveraging, and M&A.

Speaker #3: With that, let me turn it back over to Pal for closing comments.

Speaker #2: Thanks, Andy. Great report. I'm on slide 10. From an economic perspective, we expect growth for the markets in which we operate to be relatively consistent with the last few quarters, with heightened levels of geopolitical instability and inflation.

Speaker #3: Regarding the outlook for the second half of the year, we continue to believe organic growth will improve in both divisions, and we are anticipating retail's organic growth, excluding contingents, to be in the range of 1.5% to 2.5%. Organic growth for specialty distribution is expected to be in the range of 2% to 4%, excluding contingent commissions.

Speaker #2: As well as the potential for higher interest rates, we believe business leaders will remain cautious. As a result, we think investments and hiring will continue to be similar levels to what we've seen over the last few quarters.

Speaker #2: As our customers have done in the past, they will navigate current challenges while pursuing growth opportunities. From a pricing standpoint, we expect admitted rates to moderate slightly, but we do not expect significant changes.

Speaker #3: With that, let me turn it back over to Pal for closing comments.

Speaker #1: Thanks, Andy. Great report. I'm on slide 10. From an economic perspective, we expect growth for the markets in which we operate to be relatively consistent with the last few quarters, with heightened levels of geopolitical instability and inflation.

Speaker #2: E&S rates are expected to remain bifurcated. Excess casualty continue to increase and cap property will decrease at rates similar to the first half of the year.

Speaker #2: In addition, we're seeing the admitted market become more competitive in some accounts in the E&S space. As a reminder, the third and fourth quarters are our lowest quarters for cap property placements.

Speaker #1: As well as the potential for higher interest rates, we believe business leaders will remain cautious. As a result, we think investments and hiring will continue at similar levels to what we've seen over the last few quarters.

Speaker #2: From an integration standpoint, we're pleased with the progress we've made to bring our teams together to deepen collaboration and leverage our capabilities. Consistent with our message, last quarter, we remain confident in our integration activities and the ability to deliver synergies of 30 to 40 million this year.

Speaker #1: As our customers have done in the past, they will navigate current challenges while pursuing growth opportunities. From a pricing standpoint, we expect admitted rates to moderate slightly.

Speaker #1: But we do not expect significant changes. E&S rates are expected to remain bifurcated. Excess casualty continues to increase, and cat property will decrease at rates similar to the first half of the year.

Speaker #2: Overall, our team is doing an outstanding job and I'm pleased with our progress. Our balance sheet and cash flow are strong and therefore will remain focused on investing in teammates to help us grow organically, share repurchases, debt reduction, enhancing our technology capabilities, and selectively acquiring specialized firms.

Speaker #1: In addition, we're seeing the admitted market become more competitive in some accounts in the E&S space. As a reminder, the third and fourth quarters are our lowest quarters for cap property placements.

Speaker #1: From an integration standpoint, we're pleased with the progress we've made to bring our teams together to deepen collaboration and leverage our capabilities. Consistent with our message, last quarter, we remain confident in our integration activities and the ability to deliver synergies of 30 to 40 million this year.

Speaker #2: Our goal is to deploy the capital we generate to drive long-term shareholder value. Lastly, we wanted to further the discussion from last quarter regarding artificial intelligence and our views on how AI may impact our business.

Speaker #2: Our customers and our industry. As a reminder, we believe AI will be an enabler for our company and our teammates. We're focused on transforming our sales and service processes, optimizing our underwriting and placement processes, and enhancing our support functions.

Speaker #1: Overall, our team is doing an outstanding job, and I'm pleased with our progress. Our balance sheet and cash flow are strong, and therefore we will remain focused on investing in teammates to help us grow organically, share repurchases, debt reduction, enhancing our technology capabilities, and selectively acquiring specialized firms.

Speaker #2: We do not believe technology will replace the need for risk advisors, brokers, or delegated underwriters. Rather, we believe it will enhance their capabilities to make them more effective in their roles.

Speaker #1: Our goal is to deploy the capital we generate to drive long-term shareholder value. Lastly, we wanted to further the discussion from last quarter regarding artificial intelligence and our views on how AI may impact our business.

Speaker #2: Our technology strategy is aligned with our goal to be the leading global provider of risk management solutions. To further our journey and build on our momentum, you may have seen last week we entered into a partnership with Anthropic, McKinsey, and Accenture to help enhance our strategy and execution.

Speaker #1: Our customers and our industry. As a reminder, we believe AI will be an enabler for our company and our teammates. We're focused on transforming our sales and service processes, optimizing our underwriting and placement processes, and enhancing our support functions.

Speaker #2: Each organization is a leader in its field and brings specific expertise that will support our ongoing AI strategy. As we've discussed last quarter, we've followed a discipline path, first building AI awareness and education across the organization, then advancing into pilot programs to validate value and practical use cases.

Speaker #1: We do not believe technology will replace the need for risk advisors, brokers, or delegated underwriters. Rather, we believe it will enhance their capabilities and make them more effective in their roles.

Speaker #1: Our technology strategy is aligned with our goal to be the leading global provider of risk management solutions. To further our journey and build on our momentum, you may have seen last week that we entered into a partnership with Anthropic, McKinsey, and Accenture to help enhance our strategy and execution.

Speaker #2: Based on the success of these initiatives and our teammates leaning in, we're ready to take the next steps to thoughtfully rewire key business processes, including sales and placement, submissions, and underwriting in the functional support areas.

Speaker #2: The rewiring is expected to drive faster cycle times, higher productivity, and stronger organic growth. As of now, we're not calling out any incremental technology spend.

Speaker #1: Each organization is a leader in its field and brings specific expertise that will support our ongoing AI strategy. As we've discussed last quarter, we've followed a disciplined path—first building AI awareness and education across the organization, then advancing into pilot programs to validate value and practical use cases.

Speaker #2: Based on our previous investments and the acquisition of accession, we're able to redirect resources from running the business towards data analytics, innovation, and AI.

Speaker #1: Based on the success of these initiatives and our teammates leaning in, we're ready to take the next steps to thoughtfully rewire key business processes, including sales and placement, submissions, and underwriting in the functional support areas.

Speaker #2: If facts change, and we need to highlight an incremental investment in technology, we will communicate our approach and expectations like we did in the past when we made larger technology investments.

Speaker #2: Regarding expectations, we do anticipate incremental organic growth and margin expansion will occur over the coming quarters and years as AI, data, and analytics become more embedded in our workflows and the workflows of the industry.

Speaker #1: The rewiring is expected to drive faster cycle times, higher productivity, and stronger organic growth. As of now, we're not calling out any incremental technology spend.

Speaker #1: Based on our previous investments and the acquisition of Accession, we're able to redirect resources from running the business towards data analytics, innovation, and AI.

Speaker #2: In closing, we feel great about the business. Our activity levels and how the team is leveraging our capabilities. Our focus continues to be on the customer and disciplined execution, which positions us well to deliver improving organic growth and strong bottom-line results over the coming quarters.

Speaker #1: If facts change and we need to highlight an incremental investment in technology, we will communicate our approach and expectations—just as we did in the past when we made larger technology investments.

Speaker #2: With that, I'll turn it back over to Michelle and open the lines for Q&A.

Speaker #3: Thank you to ask a question. Please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker #1: Regarding expectations, we do anticipate incremental organic growth and margin expansion will occur over the coming quarters and years as AI, data, and analytics become more embedded in our workflows and in the workflows of the industry.

Speaker #3: In fairness, all we ask that you please limit yourselves to one question and one follow-up. One moment while we compile our Q&A roster. Our first question comes from the line of Mike Zaresky with VMO Capital Markets.

Speaker #1: In closing, we feel great about the business, our activity levels, and how the team is leveraging our capabilities. Our focus continues to be on the customer and disciplined execution, which positions us well to deliver improving organic growth and strong bottom-line results over the coming quarters.

Speaker #3: Your line is open. Please go ahead.

Speaker #4: Hey, thanks. Good morning. On the accession integration, maybe a two-part question. When we look at total revenues for the quarter, kind of x the organic delta versus the street, it looked like by at least a couple percent.

Speaker #1: With that, I'll turn it back over to Michelle and open the lines for Q&A.

Speaker #2: Thank you. To ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Speaker #2: In fairness to all, we ask that you please limit yourselves to one question or one follow-up. One moment while we compile our Q&A roster.

Speaker #4: I'm guessing it's coming because of accession. Is there something on timing on revenues or anything we should keep in mind? And I guess the two-part question, I can use this as my follow-up then, would be on the margin bridge, given the accession kind of coming in at a material rate, is there a bridge or something you can kind of help us with to kind of think about the seasonality that's going to impact the numbers on a go-forward basis?

Speaker #2: Our first question comes from the line of Mike Zaresky with VMO Capital Markets. Your line is open. Please go ahead.

Speaker #3: Hey, thanks. Good morning. On the accession integration, maybe a two-part question. When we look at total revenues for the quarter, kind of ex the organic delta versus the Street, it looked light by at least a couple of percent.

Speaker #4: Thanks.

Speaker #5: Hey, good morning, Mike. Andy here. On the revenues, the guidance that we gave over a few different quarters, we said the revenues are relatively well-balanced between each of them.

Speaker #3: I'm guessing it's coming because of accession. Is there something on timing on revenues or anything we should keep in mind? And I guess the two-part question I'm I can use this as my follow-up then would be on the margin bridge, given the accession kind of coming in at a material rate, is there a bridge or something you can kind of help us with to kind of think about the seasonality that's going to impact the numbers on the go-forward basis?

Speaker #5: July is a big month for the business on placements. For us, so that's probably one of the areas to ask some seasonality to it that moves the revenues around.

Speaker #5: I think we were right in the range of about 440, 445 in the first quarter, 410 in the second. That's kind of pretty much right in line with what we were anticipating for the business.

Speaker #5: We didn't give exact details, but we said relatively well-balanced. So didn't see anything unusual inside of there. And then you get a pretty good idea of the back end of the year on what we reported.

Speaker #3: Thanks.

Speaker #4: Hey, good morning, Mike. Andy here. On the revenues, the guidance that we gave over a few different quarters—we said the revenues are relatively well balanced between each of them.

Speaker #5: We did have like everybody else some noise on the implementation of 606, so there'll probably be a few things that move around by the quarters, but overall should be pretty comparable for us now.

Speaker #4: July is a big month for the business on placements for us, so that's probably one of the areas that has some seasonality to it that moves the revenues around.

Speaker #5: On the bridge, what we communicated was that the business runs around a 35% margin in total. So it won't really have any addition or subtraction to brown and brown at a total level.

Speaker #4: I think we were right in the range of about 440, 445 in the first quarter, 410 in the second. That's pretty much right in line with what we were anticipating for the business.

Speaker #5: It will fall around the margins in our specialty distribution, just purely from a weighting standpoint because our legacy programs in wholesale business ran higher than that.

Speaker #4: We didn't give exact details, but we said "relatively well balanced," so didn't see anything unusual inside of there. And then you get a pretty good idea of the back end of the year on what we reported.

Speaker #5: But that's kind of right in line with what we anticipated when we did the deal.

Speaker #4: We did have, like everybody else, some noise on the implementation of 606, so there'll probably be a few things that move around by the quarters, but overall, it should be pretty comparable for us now.

Speaker #4: Okay, then just quickly as a follow-up on the cash flow impact from accession, I think you said in your prepared remarks, which were helpful, there was an earn-out impact.

Speaker #4: On the bridge, what we communicated was that the business runs around a 35% margin in total. So it won't really have any addition or subtraction to Brown & Brown.

Speaker #4: So is that that's not going to reverse its I guess is there we should think about kind of the continued earn-out impact or is this earn-out sooner than expected?

Speaker #4: At a total level, it will bring down the margins in our Specialty Distribution, just purely from a weighting standpoint, because our legacy programs and wholesale business ran higher than that.

Speaker #4: I just want to make sure when we you guys still have one of the best cash flow conversions, want to make sure we're thinking through that correctly on a go-forward basis.

Speaker #4: But that's kind of right in line with what we anticipated when we did the deal.

Speaker #5: Sure. Yeah, Mike, our comment there was that was really a one-time out of associated with earn-outs that we carried over at the time of the acquisition.

Speaker #3: Okay, then just quickly as a follow-up on the cash flow impact from accession, I think you said in your prepared remarks, which were helpful, there was an earn-out impact so is that that's not going to reverse its I guess the is there we should think about kind of the continued earn-out impact or is this earn-out sooner than expected?

Speaker #5: So we don't see that same level impact. To what the cash flow going forward, we still think the overall business itself will run in that 24 to 26 percent on a cash flow conversion over the long term.

Speaker #5: We feel really good about it. The organization does have a lower cash flow conversion in the first half versus the second half, but very similar to brown and brown.

Speaker #3: I just want to make sure, when we— you guys still have one of the best cash flow conversions. I want to make sure we're thinking through that correctly on a go-forward basis.

Speaker #4: Understood. So one time and even with the tech investments, still 24 to 26. Thank you.

Speaker #4: Sure. Yeah, Mike, our comment there was that this was really a one-time item associated with earn-outs that we carried over at the time of the acquisition.

Speaker #5: Yes, correct. Thank you.

Speaker #3: Thank you. And one moment for our next question. Our next question is going to come from the line of Gregory Peters with Raymond James.

Speaker #4: So we don't see that same level of impact to cash flow going forward. We still think the overall business itself will run in that 24% to 26% range on cash flow conversion over the long term.

Speaker #3: Your line is open. Please go ahead.

Speaker #4: Well, good morning, everyone. So I'm going to pivot to the organic revenue growth. Paul, you said in your in the press release that you have great momentum as we head into the back half of the year.

Speaker #4: We feel really good about it. The organization does have a lower cash flow conversion in the first half versus the second half, but very similar to Brown & Brown.

Speaker #4: And I'm trying to reconcile that comment with the numbers that reported particularly in the specialty business. There's a lot of rhetoric in the marketplace around price competition, especially coming from MGAs and I have to believe that's going to spill over and have some drag on your program business.

Speaker #3: Understood. So one time and even with the tech investments still 24 to 26. Thank you.

Speaker #4: Yes, correct. Thank you.

Speaker #2: Thank you. And one moment for our next question. Our next question is going to come from the line of Gregory Peters with Raymond James.

Speaker #2: Your line is open. Please go ahead.

Speaker #4: But maybe you can just help us understand about the momentum that you're seeing internally.

Speaker #3: Well, good morning, everyone. So, I'm going to pivot to the organic revenue growth. Paul, you said in the press release that you have great momentum as we head into the back half of the year.

Speaker #2: Okay. So let's address the point that you just made because I think that's a very fair one. In the E&S space, there is more competition today from admitted markets and programs than there has been in the past.

Speaker #3: And I'm trying to reconcile that comment with the numbers that were reported, particularly in the specialty business. There's a lot of rhetoric in the marketplace around price competition, especially coming from MGAs, and I have to believe that's going to spill over and have some drag on your program business.

Speaker #2: And that is exactly what you would expect in a transitioning market. So having said that, remember, we have all the new 180 programs which are obviously part of AeroVision specialty today, coming online 8/1.

Speaker #3: But maybe you can just help us understand the momentum that you're seeing internally.

Speaker #1: Okay, so let's address the point that you just made because I think that's a very fair one. In the ENS space, there is more competition today from admitted markets and programs than there has been in the past.

Speaker #2: And the vast majority of those are casualty-driven. That doesn't mean that that's good or bad. It just means it gives us a broader balance of our risk portfolio.

Speaker #2: And the answer is we are very disciplined about our underwriting. And so you're correct in saying that it will continue to put pressure on our programs but as Andy said, we believe that programs will grow somewhere in the range of 2 to 4 percent organically in the second half of the year.

Speaker #1: And that is exactly what you would expect in a transitioning market. So having said that, remember we have all the new 180 programs, which are obviously part of Aerovision Specialty today, coming online August 1.

Speaker #4: Okay. Thanks for that answer. I guess I'm going to pivot to well, I guess stay on the pricing cycle theme. Can you walk us through the accounting on contingents?

Speaker #1: And the vast majority of those are casualty-driven. That doesn't mean that that's good or bad. It just means it gives us a broader balance of our risk portfolio.

Speaker #1: And the answer is, we are very disciplined about our underwriting. And so, you're correct in saying that it will continue to put pressure on our programs, but as Andy said, we believe that programs will grow somewhere in the range of 2% to 4% organically in the second half of the year.

Speaker #4: And this is where I'm going with it. With price competition and price cuts, particularly in property cat and other areas, it seems like there's going to be this natural downward drift or headwind towards what kind of contingents you can get in the future.

Speaker #4: So can you walk us through the accounting? Is the contingents a real-time assessment? Is there a lag associated with it? And the reason why I'm asking this is not necessarily 26.

Speaker #3: Okay, thanks for that answer. I guess I'm going to pivot to, well, I guess stay on the pricing cycle theme. Can you walk us through the accounting on contingents?

Speaker #4: I'm thinking about 27 and 28. Thanks.

Speaker #2: Okay. So I'm going to answer part of that and I'm going to let Andy answer part of that. So remember, cat property typically is in the E&S market.

Speaker #3: And this is where I'm going with it. With price competition and price cuts, particularly in property cat and other areas, it seems like there's going to be this natural downward drift or headwind towards what kind of contingents you can get in the future.

Speaker #2: And as a result, it is not subject to a profit sharing or contingency. Having said that, Andy, would you like to address Greg's assessment of how the rest of it works?

Speaker #3: So, can you walk us through the accounting? Is the contingents a real-time assessment? Is there a lag associated with it? And the reason why I'm asking this is not necessarily 26.

Speaker #5: Yeah, Greg, maybe a good way to think about it. Break it into basically two buckets. Okay. And when we say two buckets, when you think about the retail side of the business, the contingents are pretty consistent.

Speaker #3: I'm thinking about 27 and 28. Thanks.

Speaker #1: Okay. So I'm going to answer part of that, and I'm going to let Andy answer part of that. So remember, cat property typically is in the ENS market.

Speaker #5: But we are not able to actually see the overall profitability for the market until we get to the end of the calculations, which are in the next year.

Speaker #1: And as a result, it is not subject to a profit sharing or contingency. Having said that, Andy, would you like to address Greg's assessment of how the rest of it works?

Speaker #5: That's why there's always adjustments up and down. And so we're recruiting those based upon placement of policies. Back and forth. You get to specialty distribution.

Speaker #5: We actually have really good visibility within our programs. So we are adjusting those based upon how we're seeing our profitability on each program. And this is maybe where some people are potentially struggling with this one is because they're thinking about overall profitability in the industry going down, that therefore there should be a direct correlation to our programs.

Speaker #4: Yeah, Greg, maybe a good way to think about it—break it into basically two buckets. Okay? And when we say two buckets, when you think about the retail side of the business, the contingents are pretty consistent.

Speaker #4: But we are not able to actually see the overall profitability for the book until we get to the end of the calculations, which are in next year.

Speaker #5: We calculate ours program by program and we're very focused on the profitability that we deliver for our carriers. And we feel really good about our contingents.

Speaker #4: That's why there's always adjustments up and down. And so we're recruiting those based upon placement of policies, back and forth. You get to specialty distribution.

Speaker #5: And that's why if you look at even the fact that organic excluding contingents has went down, organic with contingents has actually went up. As an organization.

Speaker #4: We actually have really good visibility within our programs, so we are adjusting those based upon how we're seeing our profitability on each program. And this is maybe where some people are potentially struggling with this one, because they're thinking about overall profitability in the industry going down, and therefore, there should be a direct correlation to our programs.

Speaker #5: So we'll continue to focus on making sure we can deliver good profitability for our carrier partners.

Speaker #4: Great. Thanks for the detail.

Speaker #5: Yeah, thank you.

Speaker #3: Thank you. And our next question is going to come from the line of Elise Greenspan with Wells Fargo. Your line is open. Please go ahead.

Speaker #4: We calculate ours program by program, and we're very focused on the profitability that we deliver for our carriers. And we feel really good about our contingents.

Speaker #6: Hi, thanks. I wanted to go to the discussion, right? Paul, you were talking about, right, some incremental hiring that you've done. So I just wanted to kind of get an update on some of the hiring activity that you guys have done.

Speaker #4: And that's why, if you look at even the fact that organic, excluding contingents, has gone down, organic with contingents has actually gone up. As an organization.

Speaker #6: This year, are there expectations that those new producers will benefit, right, the organic numbers that you laid out for the back half? And then how should we think about the hiring?

Speaker #4: So, we'll continue to focus on making sure we can deliver growth and profitability for our carrier partners.

Speaker #3: Great. Thanks for the detail.

Speaker #4: Yeah, thank you.

Speaker #6: Incrementally, potentially benefiting revenue growth in next year as well?

Speaker #2: Thank you. And our next question is going to come from the line of Elise Greenspan with Wells Fargo. Your line is open. Please go ahead.

Speaker #5: So good morning, Elise. And so I want to clarify I'm about to sneeze. Bless you. Excuse me. So I wanted to clarify, first of all, thank you.

Speaker #5: Hi, thanks. I wanted to go to the discussion, right? Powell, you were talking about, right, some incremental hiring that you've done. So I just wanted to kind of get an update on some of the hiring activity that you guys have done.

Speaker #5: We're always hiring talented people. And so this is not some new or different strategy. I think that's an important distinction. But I want to make sure that you and everybody else understand that we're very focused on organic growth.

Speaker #5: This year, are there expectations that those new producers will benefit, right, the organic numbers that you laid out for the back half? And then how should we think about the hiring?

Speaker #5: Incrementally, could this potentially benefit revenue growth in the next year as well?

Speaker #5: And we're committed to continuing to hire good people as we always have. And this is just part of normal business operations and if, in fact, we decided to put some significant investments in new talent into the system, we would call those out, but we're not calling those out right now.

Speaker #4: So good morning, Elise.

Speaker #1: And so I want to clarify—I'm about to sneeze.

Speaker #4: Bless you. So I wanted to clarify first of all, thank you. We're always hiring talented people. And so this is not some new or different strategy.

Speaker #5: I just want you to understand, Elise, and everybody else out there, how committed we are to focusing on growing our business organically and in my mind, that is always been and it always will be the focus of our organization, which is getting the right people in the right spots to deliver solutions for our customers.

Speaker #4: I think that's an important distinction. But I want to make sure that you and everybody else understand that we're very focused on organic growth.

Speaker #4: And we're committed to continuing to hire good people, as we always have. This is just part of normal business operations, and if, in fact, we decided to put some significant investments in new talent into the system, we would call those out, but we're not calling those out right now.

Speaker #5: That's the most important thing. And so as I've said also, if I said what's after that, at the current levels, probably share repurchases and then after that, we have the idea of technology investments and selective M&A.

Speaker #4: I just want you to understand, Elise, and everybody else out there, how committed we are to focusing on growing our business organically. In my mind, that has always been, and it always will be, the focus of our organization, which is getting the right people in the right spots to deliver solutions for our customers.

Speaker #6: Thanks. And then my second question with the retail or just so as you guys are thinking about the retail, I know you gave guidance, right, for the back half of the year saying in the range, I think, of one and a half to two and a half percent.

Speaker #6: When you guys think about that, those growth levels, are you assuming just similar pricing conditions? And I guess most interested also just what you guys are assuming on the property side, right, assuming that there's an inactive wind season, which seems like that's what people are expecting at this point.

Speaker #4: That's the most important thing. And so, as I've said also, if I said what's after that, at the current levels, probably share repurchases, and then after that, we have the idea of technology investments and selective M&A.

Speaker #2: Yes. So the first part of your question is yes, we're assuming that rates are kind of in line with how we spelled them out.

Speaker #5: Thanks. And then my second question with the retail or just so as you guys are thinking about the retail, I know you gave guidance, right, for the back half of the year saying in the range, I think of one and a half to two and a half percent.

Speaker #2: There will be some moderation and admitted rates. We believe in the E&S cat property rates they'll probably be continued downward pressure barring event or events.

Speaker #5: When you guys think about those growth levels, are you assuming just similar pricing conditions? And I guess I'm most interested also in what you guys are assuming on the property side—right, assuming that there's an inactive wind season, which seems like that's what people are expecting at this point.

Speaker #2: And to continue upward pressure in certain segments of casualty. Primary being under less pressure than the excess. It is interesting at least that here we are at the end of July and we've not a lot of people are talking about wind season.

Speaker #1: Yes. So the first part of your question is yes, we're assuming that rates are kind of in line with how we spelled them out.

Speaker #2: And so historically in the last couple of years, we've had later events since September and even into early October. I'm not foreshadowing something, but I do think it's kind of interesting.

Speaker #1: There will be some moderation in admitted rates. We believe that in the ENS cat property rates, there will probably be continued downward pressure, barring an event or events.

Speaker #2: I have a question for you though, Elise. So if I may, we have always broken out our organic growth on a basis of core and then now we're giving you another metric of with contingents and profit sharing.

Speaker #1: And to continue, there's upward pressure in certain segments of casualty. Primary is under less pressure than excess. It is interesting, at least, that here we are at the end of July, and not a lot of people are talking about wind season.

Speaker #2: And the other brokers just give you one. So how do you think about that? I'm curious if you just give us a little insight into how you think about that.

Speaker #1: And so historically in the last couple of years, we've had later events since September and even into early October. I'm not foreshadowing something, but I do think it's kind of interesting.

Speaker #6: Well, look, I think we all write value the incremental disclosure, right, that you guys are kind of now showing it with contingents and without.

Speaker #1: I have a question for you though, Elise. So if I may, we have always broken out our organic growth on a basis of core and then now we're giving you another metric of with contingents and profit sharing.

Speaker #6: I think there is, right, I mean, there is one other broker, right, that does show it similarly to you guys and the rest does not.

Speaker #6: So obviously now we can look at it both ways, right, to kind of put you guys on a level playing field.

Speaker #1: And the other brokers just give you one. So, how do you think about that? I'm curious if you could just give us a little insight into how you think about that.

Speaker #2: Just curious. Thank you very much, Elise.

Speaker #6: Thanks.

Speaker #3: Thank you. One moment for our next question. Our next question will come from the line of Mark Hughes with Truist. Your line is open.

Speaker #5: Well, look, I think we all really value the incremental disclosure, right? You guys are kind of now showing it with, right, with contingents and without.

Speaker #3: Please go ahead.

Speaker #2: Yeah, thank you. Appreciate it. Paul, I'll maybe ask you again to prognosticate on cat property pricing your language seemed to be a little more constructive in this release.

Speaker #5: I think there is, right? I mean, there is one other broker, right, that does show it similarly to you guys, and the rest do not.

Speaker #2: Don't expect material change in the second half versus the first half. I'm just sort of curious whether you would be a bold enough to say we're getting closer to a bottom or too soon to tell.

Speaker #5: So, obviously, now we can look at it both ways, right? To kind of put you guys on a level playing field.

Speaker #1: Just curious. Thank you very much, Elise.

Speaker #5: Thanks.

Speaker #5: Yeah, I don't want to speculate on getting to the bottom, but what I can tell you is if you look at rates, and I'll give you just a specific geography of the country as a comparator, if you look at the rates in Southeast Florida, many of the rates in that cat property along the coast are today at 2017 levels.

Speaker #2: Thank you. One moment for our next question. Our next question will come from the line of Mark Hughes with Truist. Your line is open.

Speaker #2: ahead.

Speaker #1: Yeah, thank you. Appreciate it. Powell, I'll maybe ask you again to prognosticate on cat property pricing. Your language seemed to be a little more constructive in this release.

Speaker #1: Don't expect material change in the second half versus the first half. I'm just sort of curious whether

Speaker #1: Don't expect a material change in the second half versus the first half. I'm just sort of curious whether you would be bold enough to say we're getting closer to a bottom, or is it too soon to tell?

Speaker #5: So they went up very quickly and then they've come down in a period of almost two years, very quickly. So the rhetorical question, which I cannot answer for you, Mark, is how much more can they go down?

Speaker #5: And so we don't know. Generally speaking, and no one's asked this yet, this time, but I think it's kind of interesting, somebody is usually asked me by this time of the year, what would it take to change or stabilize that market?

Speaker #4: As a comparator, if you look at the rates in Southeast Florida, many of the rates in that cat property along the 'please go' coast are today at 2017 levels.

Speaker #5: And as much as it pains me to say this, I think it's somewhere between 100 and 150 billion dollars of losses, which is just staggering.

Speaker #4: So they went up very quickly, and then they've come down in a period of almost two years, very quickly. So the rhetorical question—which I cannot answer for you, Mark—is how much more can they go down?

Speaker #5: Having said that, we don't hope for that, obviously. And it would not be good for the Americans affected. But you put a storm into the Gulf of Mexico when that water is really warm or up along the Atlantic coast, along Florida, and they could do easily 100 billion dollars of loss depending on where it comes in.

Speaker #4: And so we don't know. Generally speaking—and no one's asked this yet this time, but I think it's kind of interesting—somebody usually has asked me by this time of the year, what would it take to change or stabilize that market?

Speaker #5: So I'm not calling the bottom. And I'm not going to speculate when we get to the bottom. I'm just kind of giving you parameters of what I think it would take to change or stabilize that.

Speaker #4: And, as much as it pains me to say this, I think it's somewhere between $100 and $150 billion of losses, which is just staggering.

Speaker #5: And there's going to continue to be a lot of competition with property in the near to intermediate term.

Speaker #4: Having said that, we don't hope for that, obviously, and it would not be good for the Americans affected. But you put a storm into the Gulf of Mexico when that water is really warm, or up along the Atlantic coast, along Florida, and that could easily do $100 billion of loss, depending on where it comes in.

Speaker #2: Understood. And then this may be a little too technical, but in the Florida surplus lines database, you see a lot more policies in the E&S market, the premium per policy is down pretty substantially, but it seems like a lot more people on the property side a lot more policies are getting done in the E&S market.

Speaker #4: So I'm not calling the bottom, and I'm not going to speculate when we get to the bottom. I'm just kind of giving you parameters of what I think it would take to change or stabilize that.

Speaker #2: Does that kind of agree with your observation to the extent that you look at that? And then why would that be? Why so many more people going into the E&S market?

Speaker #4: And there's going to continue to be a lot of competition with property in the near to intermediate term.

Speaker #1: Understood. And then, this may be a little too technical, but in the Florida surplus lines database, you see a lot more policies in the E&S market. The premium per policy is down pretty substantially, but it seems like on the property side, a lot more policies are getting done in the E&S market.

Speaker #5: Okay, so yes, I'd agree with that. And think about it this way. From a carrier standpoint, the idea of moving cat property or property in Florida, defined as cats, exposed in many instances gives them the flexibility of rate and form as opposed to a filed rate which all admitted rates are.

Speaker #1: Does that kind of agree with your observation, to the extent that you look at that? And then, why would that be? Why are so many more people going into the ENS market?

Speaker #5: And as you know, that means you have an upper bound and a lower bound. And so from a standpoint of whether it's a commercial or residential, what you find is that gives them more flexibility to pivot the pricing and what in the residential area the governor and the insurance department is trying to do is to continue to have a competitive marketplace.

Speaker #4: Okay. So yes, I'd agree with that. And think about it this way. From a carrier standpoint, the idea of moving cat property or property in Florida, defined as cat, exposed in many instances gives them the flexibility of rate and form as opposed to a filed rate which all admitted rates are.

Speaker #5: And as you've seen, they're continues to be a depopulation of the residential citizens program. Having said that, there are lots of carriers that may have been on large property placements historically that are admitted that want to get off because they don't want that exposure themselves and the E&S market because of the competitive environment is quickly picking that up.

Speaker #4: And as you know, that means you have an upper bound and a lower bound. So, from the standpoint of whether it's commercial or residential, what you find is that gives them more flexibility to pivot the pricing. And what, in the residential area, the governor and the insurance department are trying to do is to continue to have a competitive marketplace.

Speaker #5: But it gives them the flexibility of rate and form.

Speaker #4: And as you've seen, there continues to be a depopulation of the residential citizens program. Having said that, there are lots of carriers that may have been on large property placements historically that are admitted that want to get off because they don't want that exposure themselves and the ENS market because of the competitive environment is quickly picking that up.

Speaker #2: Very good. Appreciate it. Thank you.

Speaker #5: Thanks, Mark.

Speaker #3: Thank you. And our next question will come from the line of Tracy Benghighi with Wolf Research. Your line is open. Please go ahead.

Speaker #5: Hello, Tracy. Tracy, we cannot hear you.

Speaker #6: Oh, sorry about that. Hi, good morning. Before getting to my question, since you asked earlier in the queue about feedback on your new disclosures, it would be helpful if you could recast prior periods over organic revenue, including contingents, to make that data.

Speaker #4: But it gives them the flexibility of rate and form.

Speaker #6: More useful. And now getting to my questions, going back to the contingent discussion, real quick, when you calculate profitability, since we're not talking about property, there is a tail associated with that.

Speaker #1: Very good. Appreciate it. Thank you.

Speaker #4: Thanks, Mark.

Speaker #2: Thank you. And our next question will come from the line of Tracy Benghighi with Wolfe Research. Your line is open. Please go ahead.

Speaker #6: So which accent or policyers does your contingent commissions come from? What does that look back period in terms of years?

Speaker #4: Hello, Tracy. Tracy, we cannot hear you.

Speaker #5: Oh, morning. Before getting to my question, since you asked earlier in the queue about feedback on your new disclosures, it would be helpful if you could recap prior periods for organic revenue, including contingents, to make that data available.

Speaker #5: Okay. Yeah. So I would tell you, I'm going to make a very broad statement because there's not one answer to the entire question. There are programs that are singular year in focus and then there are other programs that are multi-year lookbacks many times the multi-year lookbacks are in programs and in wholesale and so what I would try to broad statement, what I would try to say is typically retail are one year in nature.

Speaker #5: More useful. And now getting to my questions, going back to the contingent discussion, real quick, when you calculate profitability, since we're not talking about property, there is a tail associated with that.

Speaker #5: So which accents or policies does your contingent commissions come from? What does that look-back period in terms of years?

Speaker #4: Okay. Yeah. So I would tell you, I'm going to make a very broad statement because there's not one answer to the entire question. There are programs that are singular year in focus.

Speaker #5: And in the specialty distribution, it could be one to multiple years.

Speaker #4: And Tracy on the multiple years, you'll see sometimes it may have a rolling calculation inside of it. So it might be an average over a three-year.

Speaker #4: And then there are other programs that are multi-year lookbacks many times the multi-year lookbacks are in programs and in wholesale. And so what I would try to broad statement, what I would try to say is typically retail are one year in nature.

Speaker #4: So there's a lot there's some reasonable amount of nuances in each of those. To your first question on the contingents, we did restate the prior year in the queue.

Speaker #4: Are you thinking a further period back or just wanting to get some clarification from me on it?

Speaker #6: Yeah, more period. Yeah. To see how you perform through cycles, etc. Correct. Yeah.

Speaker #4: And in the specialty distribution, it could be one to multiple years.

Speaker #4: Okay.

Speaker #6: Okay. And then I had a follow-up on the assession question. So back in the fourth quarter, you did share a revised revenue recognition. And you're basically retreated from the 430 to 450 million a quarter, but you didn't change your annual guide, which I think would imply 1.7 to 1.8 billion.

Speaker #3: And Tracy on the multiple years, you'll see sometimes it may have a rolling calculation inside of it. So it might be an average over a three-year.

Speaker #3: So, there's just a reasonable amount of nuance in each of those. To your first question on the contingents, we did restate the prior year in the Q.

Speaker #6: So it's good to hear that assession revenues at a quarter came in as expected. But that would basically imply that the next two months of the third quarter would make up the difference.

Speaker #3: Are you thinking of a further period back, or just wanting to get some clarification from me on it?

Speaker #6: So do you still think you'll achieve your annual guide?

Speaker #5: Yeah, more period. Yeah. Just to see how you perform through cycles, etc. Correct. Yeah.

Speaker #4: Yeah, we still believe that the business will be in that range. July is a large month for the business. And then also taking into consideration our comment about selling a non-recurring business in retail about 30, 35.

Speaker #3: Okay.

Speaker #5: Okay. And then I had a follow-up on the ascension question. So back in the fourth quarter, you did share a revised revenue recognition, and you basically retreated from the $430 to $450 million a quarter, but you didn't change your annual guide, which I think would imply $1.7 to $1.8 billion.

Speaker #4: But no, we feel really good about the business and how it's performing in the growth outlook.

Speaker #6: Okay. Excellent. Thank you.

Speaker #4: Thank you.

Speaker #5: So it's good to hear that accession revenues for the quarter came in as expected. But that would basically imply that the next two months of the third quarter would make up the difference.

Speaker #5: Thank you.

Speaker #3: Thank you. And our next question is going to come from the line of Rob Cox with Goldman Sachs. Your line is open. Please go ahead.

Speaker #5: So, do you still think you'll achieve your annual guide?

Speaker #7: Hey, thanks. Good morning. So on the margin, there's a lot of considerations moving pieces. At this point, is there an expectation for the 2026 full-year margin?

Speaker #3: Yeah, we still believe that the business will be in that range. July is a large month for the business. And then also taking into consideration our comment about selling a non-recurring business in retail, about $30–35 million.

Speaker #7: Just curious if you can kind of walk us through the bigger pieces and some of your comments on a session and synergies there, combined with the AI spend.

Speaker #3: But no, we feel really good about the business and how it's performing in the growth outlook.

Speaker #5: Okay. Excellent. Thank you.

Speaker #7: Should we be expecting that less of the assession synergies drop to the bottom line?

Speaker #3: Thank you.

Speaker #4: Thank you.

Speaker #2: Thank you. And our next question is going to come from the line of Rob Cox with Goldman Sachs. Your line is open. Please go ahead.

Speaker #4: Hi, good morning, Mike. Rob. Yeah, I think our commentary when we came into the year and guidances, we said that we anticipated that margins would be around flat, excluding lower investment income.

Speaker #6: Hey, thanks. Good morning. So on the margin, there's a lot of considerations moving pieces. At this point, is there an expectation for the 2026 full-year margin?

Speaker #4: And that was really the income that we picked up in the second quarter of last year. We continue to hold with that guidance. We think based upon the performance year to date that we're doing really well on it and the outlook for the back end of the year continues to be good.

Speaker #6: Just curious if you can kind of walk us through the bigger pieces and some of your comments on accretion and synergies there, combined with the AI spend.

Speaker #6: Should we be expecting that less of the acquisition synergies drop to the bottom line?

Speaker #4: We reaffirm our synergy targets as you heard from Powell at the 30 to 40 million dollars this year. And within the technology spend, we've been working on this for years and we talked about this at the first quarter that we have been consciously moving our cost from that running of the business and moving a higher percentage to data analytics innovation and AI.

Speaker #3: Hi, good morning, Mike. Or Rob. No, I think our commentary when we came into the year and guidances we said that we anticipated that margins would be around flat, excluding lower investment income.

Speaker #3: And that was really the income that we picked up in the second quarter of last year. We continue to hold with that guidance. We think, based upon the performance year to date, that we're doing really well on it, and the outlook for the back end of the year continues to be good.

Speaker #4: So we feel very comfortable with where we are in the cost at this stage, but not changing any guidance on our margins for 2026.

Speaker #7: Okay, great. Thank you. And just a follow-up on the Florida surplus lines clearinghouse administrator opportunity. That opportunity is out there for somebody just curious if you could tell us why or why not the opportunity to be the Florida surplus lines clearinghouse administrator would be interesting for Brown & Brown.

Speaker #3: We reaffirmed our synergy targets, as you heard from Powell, at the $30 to $40 million this year. And within the technology spend, we've been working on this for years, and we talked about this in the first quarter—that we have been consciously moving our costs from, quote, the running of the business, and moving a higher percentage to data analytics, innovation, and AI.

Speaker #7: And if you have any idea what this could mean for revenue or profit going forward for the selected broker.

Speaker #3: So we feel very comfortable with where we are on the cost at this stage, but I'm not changing any guidance on our margins for 2026.

Speaker #5: So Rob, the answer to the question is obviously we're based in Florida and would like to continue to grow our business in Florida. So we believe it does create an opportunity for us, but at the present time, we're not going to speculate on what that opportunity might look like and telling at which time they identify actually the winner.

Speaker #6: Okay, great. Thank you. And just a follow-up on the Florida Surplus Lines Clearinghouse Administrator opportunity. That opportunity is out there for somebody. Just curious if you could tell us why or why not the opportunity to be the Florida Surplus Lines Clearinghouse Administrator would be interesting for Brown & Brown.

Speaker #5: And so we wouldn't want to speculate on that because that process hasn't run its course. Once that is taken care of and if in fact we.

Speaker #6: And if you have any idea what this could mean for revenue or profit going forward for the selected broker.

Speaker #5: Were one of those parties that was considered, then we might talk about that. But at the present time, we're not going to speculate.

Speaker #4: So, Rob, the answer to the question is, obviously, we're based in Florida and would like to continue to grow our business in Florida. So, we believe it does create an opportunity for us.

Speaker #7: Okay. Thank you.

Speaker #5: Thanks, Rob.

Speaker #3: Thank you. One moment for our next question. Our next question comes from the line of Pablo Singson with JP Morgan. Your line is open.

Speaker #4: But at the present time, we're not going to speculate on what that opportunity might look like, and we're not telling at which time they actually identify the winner.

Speaker #3: Please go ahead.

Speaker #7: Hi, good morning. As we start thinking about a session rolling into Brown's overall organic can you please give perspective on how the block has been growing the past two to three quarters?

Speaker #4: And so we wouldn't want to speculate on that because that process hasn't run its course. Once that is taken care of, and if in fact we were one of those parties that was considered, then we might talk about that.

Speaker #7: I think based on what you've disclosed so far, it seems like LTM revenues are running maybe a little over 1.7. And when you announced the deal pro forma, revenues were about 1.7, but maybe a bit lower, right?

Speaker #4: But at the present time, we're not going to speculate.

Speaker #7: Because assuming you grew over that base. But any sort of perspective you can provide as we think about showing a session in the next couple of quarters here?

Speaker #6: Okay. Thank you.

Speaker #4: Thanks, Rob.

Speaker #2: Thank you. One moment for our next question. Our next question comes from the line of Pablo Singson with J.P. Morgan. Your line is open.

Speaker #4: Yeah. Good morning, Pablo. As going forward, right, just for clarity, we won't be breaking out a growth for a session versus a growth for Brown & Brown.

Speaker #2: Please go ahead.

Speaker #6: Hi, good morning. As we start thinking about assession ruling and the Browns overall organic can you please give perspective on how the block has been growing the past two to three quarters?

Speaker #4: We're one company. And so that's when we gave guidance in the back end of the year for the second half. That is a combined business at this stage.

Speaker #6: I think based on what you've disclosed so far, it seems like LTM revenues are running maybe a little over $1.7 billion. And when you announced the deal pro forma, revenues were about $1.7 billion, but maybe a bit lower, right?

Speaker #4: Because we'll be leveraging our joint capabilities across the organization. The business has been growing well on comparable business. We're very pleased with the underlying performance and extremely pleased with how all of our teammates are leaning in and helping us grow the organization.

Speaker #6: Because assuming you grew over that base. But any sort of perspective you could provide as we think about showing a session in the next couple of quarters here?

Speaker #3: Yeah. Good morning, Pablo. As going forward, right, just for clarity, we won't be breaking out a growth for a session versus a growth for Brown & Brown.

Speaker #7: Understood. Thank you. And then second question just on margins. I just want to understand better the sustainability of the strong result in QQ. I think Andy had called it about 110 bips one time benefit in retail.

Speaker #3: We're one company, and so that's when we gave guidance for the back end of the year—for the second half. That is a combined business at this stage.

Speaker #7: And then I think the 10-year reference has a bunch of things like lower non-cash stock comp, lower claims in Brown's health plan, as drivers of lower expenses.

Speaker #3: Because we'll be leveraging our joint capabilities across the organization. The business has been growing well on comparable business. We're very pleased with the underlying performance and extremely pleased with how all of our teammates are leaning in and helping us grow the organization.

Speaker #7: So I guess aside from the one-time accrual, do you expect these other favorable factors to persist in the second half?

Speaker #5: No, not the one-time items that we called out. No, we would not anticipate those recurring in the third or fourth quarter.

Speaker #7: Right. But things like lower non-cash stock comp, lower claims in Brown's health plan, I think these are items mentioned in the Q.

Speaker #6: Understood. Thank you. And then, second question, just on margins. I just want to understand better the sustainability of the strong result in Q2. I think Andy had called it about 110 basis points one-time benefit in retail.

Speaker #4: Yeah. On those where they're running cost, yes. I think for all companies, there's always the unknown of healthcare cost. And like almost all other companies, when we're looking diligently to manage our overall healthcare claims, they normally do pick up in the back end of the year based upon the structure of our plan.

Speaker #6: And then I think the 10-year reference has a bunch of things, like lower non-cash stock comp, lower claims in Brown's health plan, as drivers of lower expenses.

Speaker #6: So, I guess aside from the one-time approval, do you expect these other favorable factors to persist in the second half?

Speaker #4: So we'll see how that progresses along.

Speaker #3: No, not the one-time items that we called out. No, we would not anticipate those recurring in the third or fourth quarter.

Speaker #7: Thank you.

Speaker #4: Thank you.

Speaker #3: Thank you. And our next question is going to come from the line of Andrew Anderson with Jeffries. Your line is open. Please go ahead.

Speaker #6: Right. But things like lower non-cash stock comp, lower claims in Brown's health plan—I think these are items mentioned in the Q.

Speaker #7: Hey, good morning. And sorry, one more on a session. And recognizing it's a small percentage of the overall transaction value, but if it is performing in line with expectations and the integration is going well, could you maybe expand a bit on why the 10Q discusses a reduction in the earn-out liabilities driven by lower projected operating results?

Speaker #3: Oh, yeah. On those, were there running costs? Yes. I think for all companies, there's always the unknown of healthcare costs. And we're like almost all other companies, where we're looking diligently to manage our overall healthcare claims. They normally do pick up in the back end of the year based upon the structure of our plan.

Speaker #3: So, we'll see how that progresses along.

Speaker #4: Yeah. Good morning, Andrew. Is what we try to do with all of those is we had to we estimated those at closing and then as we had an opportunity to get in and look at the businesses and refine.

Speaker #6: Thank you.

Speaker #3: Thank you.

Speaker #2: Thank you. And our next question is going to come from the line of Andrew Anderson with Jeffries. Your line is open. Please go ahead.

Speaker #4: We've adjusted those through. I wouldn't say that's a reflection of the underlying performance. If you look to Brown & Brown, you can see ours doesn't make we normally don't have significant adjustments.

Speaker #6: Hey, good morning. And sorry, one more on Assurex. Recognizing it's a small percentage of the overall transaction value, but if it is performing in line with expectations and the integration is going well, could you maybe expand a bit on why the 10-Q discusses a reduction in the earn-out liabilities driven by lower projected operating results?

Speaker #4: If you go back and you look over the last nine months, a session, the overall delta is very small. So we had taken charges in the back end of the year.

Speaker #4: We adjusted this year, but year to I would call it about a year to date over the last nine months. It's very, very small in the charge.

Speaker #3: Yeah. Good morning, Andrew. What we try to do with all of those is, we estimated those at closing, and then as we had an opportunity to get in and look at the businesses, we refined them.

Speaker #7: Okay. Thank you. And on the slides, you had mentioned that future M&A could primarily focus on specialty businesses. Is that because you're seeing valuations as more attractive in that area or because you think specialty is a larger strategic opportunity for you all going forward?

Speaker #3: We've adjusted those through. I wouldn't say that's a reflection of the underlying performance. If you look to Brown & Brown, you can see ours doesn't make—we normally don't have significant adjustments.

Speaker #5: I think the point, Andrew, is this. We're not thinking about scale solely. We're thinking about those that have specialisms or specialty capabilities. So don't define that too don't take that too literally.

Speaker #3: If you go back and look over the last nine months for a session, the overall delta is very small. So, we had taken charges in the back end of the year.

Speaker #3: We adjusted this year, but year-to— I would call it probably, but year-to-date over the last nine months, it's very, very small in the charge.

Speaker #5: It could be more figurative in nature. That's how I would say that. But again, remember, we're bringing 5,500 we brought 55 new 5,500 new teammates together.

Speaker #6: Okay, thank you. And on the slides, you had mentioned that future M&A could primarily focus on specialty businesses. Is that because you're seeing valuations as more attractive in that area, or because you think specialty is a larger strategic opportunity for you all going forward?

Speaker #5: We are executing a plan and we're very committed to growing our business organically. And as I said earlier, we're focused on continuing to do what we've done in the past in terms of hiring good people that can help us grow our business.

Speaker #4: I think the point, Andrew, is this: we're not thinking about scale solely. We're thinking about those that have specialisms or specialized capabilities. So don't define that too—don't take that too literally.

Speaker #5: And at the present time, share repurchases debt pay down, investments in technology, and selective M&A.

Speaker #4: Hey, Andrew, question for you. Just a follow-up. Based on your question, are you thinking that we were saying that we're only looking for businesses to go into the specialty distribution segment?

Speaker #4: It could be more figurative in nature. That's how I would say that. But again, remember, we're bringing 5,500 we brought 55 new 5,500 new teammates together.

Speaker #4: And no, that would not be the case. What we're saying is we're looking for businesses that have specializations that could be in the retail segment, that could be in specialty distribution.

Speaker #4: We are executing a plan and we're very committed to growing our business organically. And as I said earlier, we're focused on continuing to do what we've done in the past in terms of hiring good people that can help us grow our business.

Speaker #4: But it's something that ultimately would add to our overall capabilities.

Speaker #5: Or enhance our specialty capabilities.

Speaker #4: Yeah. Does that help clarify?

Speaker #7: Yeah. I had taken it as he had asked. So I appreciate the clarification. Thank you.

Speaker #4: And at the present time, share repurchases, debt paydown, investments in technology, and selective M&A.

Speaker #4: Okay. Perfect. Thank you. Thank you. Appreciate it.

Speaker #3: Thank you. And our next question is going to come from the line of Alex Scott with Barclays. Your line is open. Please go ahead.

Speaker #3: Hey Andrew, question for you—just a follow-up. Based on your question, are you thinking that we were saying we're only looking for businesses to go into the specialty distribution segment?

Speaker #7: Thanks. I wanted to see in specialty distribution if you could expand on the investments that you're making in Europe what are some of the things you're doing there?

Speaker #3: And no, that would not be the case. What we're saying is we're looking for businesses that have specializations that could be in the retail segment, that could be in specialty distribution.

Speaker #7: How do you expect that to contribute to growth over time?

Speaker #5: So we have as you may know, in Europe, we have the large retail business. We have a growing nice-sized wholesale business and a program's business.

Speaker #3: But it's something that ultimately would add to our overall capabilities.

Speaker #4: Or enhance or boosting capabilities.

Speaker #3: Yeah. Does that help clarify?

Speaker #6: Yeah. I had taken it as ENS. So I appreciate the clarification. Thank you.

Speaker #3: Okay. Perfect. Thank you. Thank you. Appreciate it.

Speaker #5: And so the investments that we're referring to are in the wholesale and programs business. And those are growth opportunities and hiring new people that bring new specializations and capabilities for us to grow that business organically going forward.

Speaker #2: Thank you. And our next question is going to come from the line of Alex Scott with Barclays. Your line is open. Please go ahead.

Speaker #6: Thanks. I wanted to see, in specialty distribution, if you could expand on the investments that you're making in Europe. What are some of the things you're doing there?

Speaker #5: So we think that we'll continue to be opportunities there as there will be in other places in our system. But there are a lot of talented people that have a number have joined and I think a number more will join as the continues to be changes in that marketplace and our business continues to grow there.

Speaker #6: How do you expect that to contribute to growth over time?

Speaker #4: So, as you may know, in Europe we have the large retail business, we have a growing, nicely sized wholesale business, and a programs business.

Speaker #5: So we're very pleased about the opportunities that are presented for us in London in both wholesale and programs.

Speaker #4: And so the investments that we're referring to are in the wholesale and programs business. Those are growth opportunities in hiring new people that bring new specializations and capabilities for us to grow that business organically going forward.

Speaker #7: Got it. Maybe going back to retail, I think it was mentioned the net new business was. A bit better than you expected this quarter and then it's continuing to build momentum.

Speaker #4: So we think that we'll continue to be opportunities there as there will be in other places in our system. But there are a lot of talented people that have a number have joined and I think a number more will join as the continues to be changes in that marketplace and our business continues to grow there.

Speaker #7: Can you talk about some of the things you're doing to build that momentum and what gives you confidence to point to that momentum in the way you got it in the back half?

Speaker #5: Yeah. So like I said, as you know, Alex, we have implemented a new Steve Hearn and the team have implemented a new go-to-market strategy.

Speaker #4: So, we're very pleased about the opportunities that are presented for us in London in both wholesale and programs.

Speaker #5: And we are we believe we're leveraging our capabilities better across the platform to the benefit of our customers. And so as we look at our inventory levels and our new business opportunities going forward, that's just a reflection of kind of how we're feeling.

Speaker #6: Got it. Maybe going back to retail, I think it was mentioned the net new business was a bit better than you expected this quarter and then it's continuing to build momentum.

Speaker #6: Can you talk about some of the things you’re doing to build that momentum, and what gives you confidence to point to that momentum in the way you’ve got it in the back half?

Speaker #5: We tell you that Andy and I both feel good about the progress that we're making in retail and the outlook. I have said in the past and I'll say it again that growth in any organization is not linear.

Speaker #4: Yeah, so like I said, as you know, Alex, we have implemented a new—Steve Hearn and the team have implemented a new go-to-market strategy.

Speaker #5: It's not exactly a straight line. And so sometimes there's ups and downs, but based on what we know and what we see, we believe that it is going to be in the ranges that we've given you.

Speaker #4: And we are we believe we're leveraging our capabilities better across the platform to the benefit of our customers. And so as we look at our inventory levels and our new business opportunities going forward, that's just a reflection of kind of how we're feeling.

Speaker #5: And obviously, we're working to improve upon that.

Speaker #7: Thank you.

Speaker #5: Thank you.

Speaker #3: Thank you. And our next question is going to come from the line of Brian Meredith with UBS. Your line is open. Please go ahead.

Speaker #4: I would tell you that Andy and I both feel good about the progress that we're making in retail and the outlook. I have said in the past and I'll say it again that growth in any organization is not linear.

Speaker #8: Yeah. Thanks. This first one, just curious, any thoughts on.

Speaker #7: The reauthorization of the NFIP program in September and how that's proceeding?

Speaker #5: Yeah. Brian, good morning. The answer is I can't remember how many times it's been pushed down the line, but 27 sort of rolls around in my mind.

Speaker #4: It's not exactly a straight line. And so sometimes there's ups and downs, but based on what we know and what we see, we believe that it is going to be in the ranges that we've given you.

Speaker #5: So these are short-term kicking the can down the nine months. 10 months. 12 months. 7 months. 5 months. Reauthorizations. Unfortunately, I don't see anything that would change that to have a lengthy reauthorization.

Speaker #4: And obviously, we're working to improve upon that.

Speaker #6: Thank you.

Speaker #3: Thank you.

Speaker #2: Thank you. And our next question is going to come from the line of Brian Meredith with UBS. Your line is open. Please go ahead.

Speaker #5: So I wish I had more information for you, but we don't.

Speaker #7: I appreciate it. And the second one, I'm just curious, on the litigation impacted revenues, obviously popped up again this quarter. When do you think that's going to start peeking out here as far as the annual impact of that?

Speaker #5: Yeah. Thanks. This first one, just curious, any thoughts on the re-authorization of the NFIP program in September and how that's proceeding?

Speaker #4: Yeah, Brian, good morning. The answer is I can't remember how many times it's been pushed down the line, but 27 sort of rolls around in my mind.

Speaker #7: And aside from those producers leaving, how has been producer retention been aside from that?

Speaker #5: Okay. So as it relates to the indication that Andy gave you, that is a full-year estimated impact today. And so we believe that that is the number that it will fall within.

Speaker #4: So these are short-term, "kicking the can down the road" nine-month, 10-month, 12-month, seven-month, five-month re-authorizations. Unfortunately, I don't see anything that would change that to have a lengthy re-authorization.

Speaker #4: So, I wish I had more information for you, but we don't.

Speaker #5: Based on all the information that we're seeing today. So I think it's important to note that. That's number one. Number two, I think that as it relates to our retention of our teammates, we're very pleased with the retention of our teammates.

Speaker #6: I appreciate it.

Speaker #5: And then the second one, I'm just curious, on the litigation-impacted revenues—obviously popped up again this quarter. When do you think that's going to start peaking out here as far as the annual impact of that?

Speaker #5: And aside from those producers leaving, how has producer retention been aside from that?

Speaker #5: But I want you to know that when you are bringing two organizations together, and when something like that where an organization is in violation of the law, that's the startup.

Speaker #4: Okay, so as it relates to the indication that Andy gave you, that is a full-year estimated impact today. And so we believe that is the number that it will fall within.

Speaker #5: Actually, it has a very unusual impact on galvanizing the entire team. And so having said that, you can define it in two ways. One, you could say it was a very bad event, which it was and is, and we're very disappointed.

Speaker #4: Based on all the information that we're seeing today. So I think it's important to note that. That's number one. Number two, I think that as it relates to our retention of our teammates, we're very pleased with the retention of our teammates.

Speaker #5: The second part, you can say is it galvanized the team together in a very short period of time whereby our teammates are working in the marketplace with our customers and our prospects arm in arm and so I try to see if there's a positive in a negative, we try to see the positive, if that makes sense.

Speaker #4: But I want you to know that when you are bringing two organizations together, and when something like that where an organization is in violation of the law, that's the startup.

Speaker #4: Actually, it has a very unusual impact on galvanizing the entire team. And so, having said that, you can define it in two ways. One, you could say it was a very bad event—which it was and is—and we're very disappointed.

Speaker #5: So that's kind of our view on that.

Speaker #7: Yeah. It's great to hear. Thank you.

Speaker #3: Thank you. And one moment for our next question. Our next question comes from the line of your own Kenner with Mizuho. Your line is open.

Speaker #4: The second part, you could say, is it galvanized a team together in a very short period of time, whereby our teammates are working in the marketplace with our customers and our prospects, arm in arm. And so, I try to see if there's a positive in a negative—we try to see the positive, if that makes sense.

Speaker #3: Please go ahead.

Speaker #8: Thank you. Good morning. Thanks for squeezing me in here. Just want to go back to the startup and the individuals who left. And maybe trying to tie that to a comment you made earlier, Andy, about hiring and how you'd always call out extraordinary hiring initiatives.

Speaker #8: So wouldn't the need or the opportunity to replace some of these individuals ultimately lead to an extraordinary hiring opportunity?

Speaker #4: So that's kind of our view on that.

Speaker #5: Yeah, it's great to hear. Thank you.

Speaker #2: Thank you. And one moment for our next question. Our next question comes from the line of Yaron Kenner with Mizuho. Your line is open.

Speaker #5: I'd like to take that. The short answer is in the marketplaces that we're affected, again, we have used this as an opportunity a difficult one, but an opportunity to hire more really talented people that fit culturally at Brown & Brown.

Speaker #2: Please go ahead.

Speaker #5: Thank you. Good morning. Thanks for squeezing me in here. I just want to go back to the startup and the individuals who left, and maybe try to tie that to a comment you made earlier, Andy, about hiring and how you'd always call out extraordinary hiring initiatives.

Speaker #5: And so as Andy said in his prepared comments, we have not fully hired all of those that have left back, but we've hired a number of them back.

Speaker #5: So, wouldn't the need or the opportunity to replace some of these individuals ultimately lead to an extraordinary hiring opportunity?

Speaker #5: And what we are trying to do is continue to look for people that are very talented to join our team in those spots. As we continue to serve those customers and we bring new customers onto the team.

Speaker #4: I'd like to take that. The short answer is: in the marketplaces that we're affected, again, we have used this as an opportunity—a difficult one, but an opportunity—to hire more really talented people that fit culturally at Brown & Brown.

Speaker #8: Got it. So just to make sure I understood this correctly, there is still an opportunity to maybe add some positions that they would replace those who left.

Speaker #8: It's not necessarily that you're looking to shift that over to the teammates that you already have or maybe move it more to institutional kind of technology-driven opportunities?

Speaker #4: And so, as Andy said in his prepared comments, we have not fully hired all of those that have left back, but we've hired a number of them back.

Speaker #5: The answer is no. We're thinking about replacing most, if not all of those positions but some of those people may have different capabilities. To help us grow our business in the future.

Speaker #4: What we are trying to do is continue to look for people who are very talented to join our team in those spots as we continue to serve those customers and bring new customers onto the team.

Speaker #5: So it could be viewed as a positive it's a negative that you've got a shortfall. In the near term, but it's positive that you may be bringing people in that have different capabilities that can help us grow our business more in the future.

Speaker #5: Got it. So, just to make sure I understood this correctly, there is still an opportunity to maybe add some positions that would replace those who left.

Speaker #8: Got it. And then my other question was just looking at a contingent commissions and the specialty distribution segment. Is there a way that you can maybe offer us some color as to how concentrated those contingents are to, let's say, the top programs in the business?

Speaker #5: It's not necessarily that you're looking to shift that over to the teammates that you already have, or maybe move it more to institutional, kind of technology-driven opportunities?

Speaker #4: The answer is no. We're thinking about replacing most, if not all, of those positions, but some of those people may have different capabilities to help us grow our business in the future.

Speaker #9: Or in the air. Is most of those contingents that we have in there are associated with our cap programs or basically non-casualty in nature?

Speaker #4: So, it could be viewed as a positive—even if it's a negative that you've got a shortfall in the near term. But it's positive that you may be bringing people in who have different capabilities that can help us grow our business more in the future.

Speaker #8: Okay. Thank you very much.

Speaker #9: Yeah. No, thank you.

Speaker #5: Got it. And then my other question was just looking at our continued commissions and the specialty distribution segment. Is there a way that you can maybe offer us some color as to how concentrated those contingents are to, let's say, the top programs in the business?

Speaker #3: Thank you. And our next question is going to come from the line of Bob Hung with Morgan Stanley. Your line is open. Please go ahead.

Speaker #7: Hi. Good morning. So my first one, on the broader talent retention and competition, I know that you talked about it a little bit. It feels like competition for talent is still intense and then you briefly mentioned that about staffing.

Speaker #6: For is most of those

Speaker #4: The contingents that we have in there are associated with our CAP programs, and are basically non-casualty in nature.

Speaker #7: Can you maybe help us unpack the current landscape for retention new hires? And how should we think about just the impact from the broader competitive landscape on your business from that perspective?

Speaker #5: Okay. Thank you very much.

Speaker #4: Yeah. No, thank you.

Speaker #2: Thank you. And our next question is going to come from the line of Bob Hung with Morgan Stanley. Your line is open. Please go ahead.

Speaker #5: Okay. So Rob, I would tell you that you're correct in saying competition for talent is very intense. It has been very intense in other periods of time.

Speaker #6: Hi. Good morning. So my first one, on the broader talent retention and competition, I know that you talked about it a little, but it feels like competition for talent is still intense and you briefly mentioned that about staffing.

Speaker #5: So I'm not saying that that's different. It is intense. I think that you find it historically that that had been more focused around major metropolitan areas.

Speaker #6: Can you maybe help us unpack the current landscape for retention new hires? And how should we think about just the impact from the broader competitive landscape on your business from that perspective?

Speaker #5: And today, after COVID, I think that it's kind of anywhere. More broadly, one of the things that is incumbent upon us or any other firm, for that matter, is to be able to articulate the capabilities that we have that maybe others don't have.

Speaker #4: Okay. So, Rob, I would tell you that you're correct in saying competition for talent is very intense. It has been very intense in other periods of time.

Speaker #5: And as a teammate, if you're talking about specifically production teammates, if you when you come to Brown & Brown, these are the suite of services or capabilities or tools in the toolbox, whatever term you want to use, that you get as part of our team and if you're on another team, you don't get those or maybe you get them at a different way or something to that effect.

Speaker #4: So I'm not saying that that's different. It is intense. I think that you find it historically that that had been more focused around major metropolitan areas.

Speaker #4: And today, after COVID, I think that it kind of anywhere more broadly. One of the things that is incumbent upon us or any other firm, for that matter, is to be able to articulate the capabilities that we have that maybe others don't have and as a teammate, if you're talking about specifically production teammates, if you when you come to Brown & Brown, these are the suite of services or capabilities or tools in the toolbox, whatever term you want to use, that you get as part of our team and if you're on another team, you don't get those or maybe you get them at a different way or something to that effect.

Speaker #5: So one of the things that we will do in the future is our core business is middle and upper middle market business. That hasn't changed.

Speaker #5: But for many of you out there, I don't know if you fully understand all the capabilities that we have both in specific niche areas.

Speaker #5: These are in retail, but it could be in specialty distribution as well. And also on the ends of the size spectrum. So larger accounts, smaller accounts, specialty accounts, and things like that.

Speaker #5: And so in the future, we're going to talk some more about that on our earnings calls. Not today. But the short answer is it's important to where we think of our organization as an athletic team.

Speaker #4: So, one of the things that we will do in the future is—our core business is middle and upper middle market business. That hasn't changed.

Speaker #4: But for many of you out there, I don't know if you fully understand all the capabilities that we have both in specific niche areas.

Speaker #5: And we're trying to get the best, not literal, but athletes on the team. And so we have created a culture that we believe is actually quite attractive to the right type of person.

Speaker #4: These are in retail, but it could be in specialty distribution as well. Also, this applies to both ends of the size spectrum—so larger accounts, smaller accounts, specialty accounts, and things like that.

Speaker #5: We believe that our reward systems drive the desired outcomes. And what we're trying to do is get more people like that on the team so we can serve as our existing customers and grow with new prospects.

Speaker #4: And so, in the future, we're going to talk some more about that on our earnings calls—not today. But the short answer is, it's important to where we think of our organization as an athletic team.

Speaker #7: Got it. Really appreciate the answer. So my second question is on technology and IT spending. You kind of talked about partnership with Anthropic, McKinsey, and such.

Speaker #4: And we're trying to get the best, not literal, but athletes on the team. And so we have created a culture that we believe is actually quite attractive to the right type of person.

Speaker #7: You also have easily the best margin in the industry. As AI cost potentially increases going forward, you mentioned that you're still really focused on margin, but just curious, how should we think about that potential incremental AI cost as you're ramping up the technological capabilities of Brown & Brown?

Speaker #4: We believe that our reward systems drive the desired outcomes. And what we're trying to do is get more people like that on the team so we can serve as our existing customers and grow with new prospects.

Speaker #7: How should we think about that margin down the road? Not just in the immediate future, but maybe 2027, 2028. Is there a way to think about that?

Speaker #5: Got it. Really appreciate the answer. So my second question is on technology and IT spending. You kind of talked about partnership with Anthropic, McKinsey, and such.

Speaker #5: All right. So first of all, thank you. You're the first person. You're the 12th person asking a question, and you're the first person to ask about technology.

Speaker #5: You also have easily the best margin in the industry. As AI costs potentially increase going forward, you mentioned that you're still really focused on margin. But just curious, how should we think about that potential incremental AI cost as you're ramping up the technological capabilities of Brown & Brown?

Speaker #5: So thank you, Rob. So the first question is, don't you think it's interesting that everybody out there talks about the benefits of AI, not Brown & Brown, as an EBITDA improvement?

Speaker #5: And we're not talking about that. We're talking about it as a better customer outcome. And enabling teammates. Now, we have acknowledged that we believe that it will drive incremental organic growth and margins over time.

Speaker #5: How should we think about that margin down the road? Not just in the immediate future, but maybe 2027 or 2028. Is there a way to think about that?

Speaker #5: So that is true. I don't believe anybody today fully understands the cost of tokens and the utilization and how people use new technologies in the workplace.

Speaker #4: All right. So, first of all, thank you. You're the twelfth person asking a question, and you're the first person to ask about technology.

Speaker #4: So, thank you, Rob. So, the first question is: Don't you think it's interesting that everybody out there talks about the benefits of AI—not Brown & Brown—as an EBITDA improvement?

Speaker #5: Because I've heard of stories where people, not at Brown & Brown, in other organizations have looked at max users and they go to the person with this idea that they say, "Oh my gosh, you've done all this great stuff.

Speaker #4: And we're not talking about that. We're talking about it as a better customer outcome. And enabling teammates. Now, we have acknowledged that we believe that it will drive incremental organic growth and margins over time.

Speaker #5: What is it that you're working on? Is it so profound?" And the answer is they're writing a book. That is not a business activity.

Speaker #5: That I checked on. Flip side is you have people that are coming up that are a big, heavy users that implement things that enable the business to be more effective.

Speaker #4: So that is true. I don't believe anybody today fully understands the cost of tokens, and the utilization, and how people use new technologies in the workplace.

Speaker #5: And have processes that become streamlined which in turn do save money. So I believe there's all kinds of opportunities out there. And I don't think anybody fully understands it.

Speaker #4: Because I've heard of stories where people, not at Brown & Brown, in other organizations have looked at max users and they go to the person with this idea that they say, "Oh my gosh, you've done all this great stuff.

Speaker #5: The benefits of AI, in my mind, and new technology, will truly be seen in years three, four, and five. That does not mean we're not going to see some benefits before then, but I want everybody to understand that's how we think about it.

Speaker #4: What is it that you're working on? Is it so profound?" And the answer is, they're writing a book. That is not a business activity.

Speaker #5: And so Andy, and I are very committed to not only the implementation but the validation of the value that we are looking for from new technologies.

Speaker #4: That I checked on. The flip side is, you have people that are coming up who are big, heavy users, who implement things that enable the business to be more effective.

Speaker #4: And have processes that become streamlined which in turn do save money. So I believe there's all kinds of opportunities out there. And I don't think anybody fully understands it.

Speaker #5: We also are pumped that we have Dory Henderson as our Chief Technology Officer. That are helping us implement it. And if you think about it, the keys to success in this tech journey is leaders need to lead, and businesses need to be part of the solution.

Speaker #4: The benefits of AI, in my mind, and new technology, will truly be seen in years three, four, and five. That does not mean we're not going to see some benefits before then, but I want everybody to understand that's how we think about it.

Speaker #5: And helping craft the businesses and the processes that will be improved. And then hold businesses accountable for outcomes and adoption. So lots of people talk about, "Hey, this is great.

Speaker #4: And so Andy, and I are very committed to not only the implementation but the validation of the value that we are looking for from new technologies.

Speaker #5: We're going to do this." And the answer is, a lot of people don't talk about awareness and teammate training. And those are all. Very, very important.

Speaker #4: We also are pumped that we have Dory Henderson as our Chief Technology Officer. They are helping us implement it. And if you think about it, the keys to success in this tech journey are leaders need to lead, and businesses need to be part of the solution.

Speaker #5: And all will impact tech spend in the future. And Andy and I, as we've said in the near term, have tried to lay out that we don't see incremental spend because we're moving it from one area to another.

Speaker #5: But if in fact we do, we're going to lay that out for you at periods of time. And if that's going to impact the margin, then how will it ultimately benefit us down the road?

Speaker #4: And helping craft the businesses and the processes that will be improved, and then holding businesses accountable for outcomes and adoption. So, lots of people talk about, "Hey, this is great."

Speaker #7: Thank you. Really appreciate that.

Speaker #5: Bob, that's why we highlighted the expansion of our value management office in there, to make sure that as we're going through different use cases, that the value is coming out of those.

Speaker #4: We're going to do this." And the answer is, a lot of people don't talk about awareness and teammate training. And those are all very, very important.

Speaker #5: And if they don't want to fail fast, then that's okay. If we work through things. But we want to make sure we have very, very clear value drivers and KPIs on the different cases.

Speaker #4: And all will impact tech spend in the future. And Andy and I, as we've said, in the near term have tried to lay out that we don't see incremental spend because we're moving it from one area to another.

Speaker #7: Got it. Thank you for the detailed answer. I really appreciate it.

Speaker #4: But if in fact we do, we're going to lay that out for you at periods of time. And if that's going to impact the margin, then how will it ultimately benefit us down the road?

Speaker #2: Thank you. And our next question is going to come from the line of Matthew Heimerman with Citi. Your line is open. Please go ahead.

Speaker #8: Hi. Good morning. Just one follow-up to the last thread. It's just what I guess, what could cause the expenses associated with McKinsey Accenture and Anthropic to be higher than kind of the reallocation you're talking about?

Speaker #5: Thank you. Really appreciate that.

Speaker #4: Bob, that's why we highlighted the expansion of our Value Management Office in there—to make sure that as we're going through different use cases, the value is coming out of those.

Speaker #8: I'm wondering, is that new systems, is that infrastructure? Is it particular apps? Is it just integration-related expenses to achieve a use case? I'm just curious, what would be the surprise there or where would those expenses potentially be surprising that would require greater investment?

Speaker #4: And if they don't want to fail fast, and that's okay if we work through things, but we want to make sure we have very, very clear value drivers and KPIs on the different cases.

Speaker #5: Got it. Thank you for the detailed answer. I really appreciate it.

Speaker #2: Thank you. And our next question is going to come from the line of Matthew Heimerman with Citi. Your line is open. Please go ahead.

Speaker #5: Good morning, Matt. It probably comes down to the pace at which change can actually be implemented. Across the organization. And we try to be very thoughtful going into this and designing our plans as to, one, which value streams we will rewire, but also how much change the organization can take.

Speaker #3: Hi. Good morning. Just one follow-up to the last thread. It's just what, I guess, what could cause the expenses associated with McKinsey Accenture and Anthropic to be higher than kind of the reallocation you're talking about?

Speaker #3: I'm wondering, is that new systems? Is that infrastructure? Is it particular apps? Is it just integration-related expenses to achieve a use case? I'm just curious, what would be the surprise there, or where would those expenses potentially be surprising that would require greater investment?

Speaker #5: Remember when we talked about how easy it is, but you got to get people trained and get it implemented. So again, as of right now, we feel comfortable with projections that we've got on expenditures that we can absorb that in our margins.

Speaker #5: If things change, we'll come back, as we said, and we'll reiterate that for you.

Speaker #8: I'll tell you one thing now. We're very pleased with the partners that we're working with and excited about the opportunities ahead. Okay. Was there another question there, Matt?

Speaker #4: Good morning, Matt. It probably comes down to the pace at which change can actually be implemented across the organization. We try to be very thoughtful going into this and designing our plans as to, one, which value streams we will rewire, but also how much change the organization can take.

Speaker #7: No, I think given the timing, that was all I had. I appreciate it though.

Speaker #5: Thank you very much. We're going to take one more question and bring it in for a landing. Number 14.

Speaker #2: All right. And our last question is going to come from the line of Roland Mayer with RBC Capital Markets. Your line is open. Please go ahead.

Speaker #4: Remember we talked about how easy it is, but you got to get people trained and get it implemented. So again, as of right now, we feel comfortable with projections that we've got on the expenditures that we can absorb that in our margins.

Speaker #8: Thank you for squeezing me in. I hate to make this last question about buybacks, but you have an upcoming debt maturity that you have said you intend to repay.

Speaker #8: With the buyback commentary, have you thought about maybe refinancing that in being able to buy back more stock?

Speaker #4: If things change, we'll come back, as we said, and we'll reiterate that for you. I'll tell you one thing though. We're very pleased with the partners that we're working with.

Speaker #5: Hi. Good morning, Matt. Roland. It is we'll evaluate that as we go into the fourth quarter. We have $400 million coming up for maturity in December.

Speaker #4: And excited about the opportunities ahead. Okay, was there another question there, Matt?

Speaker #5: No. I think given the timing, that was all I had. I appreciate it though.

Speaker #5: And we have very good cash flow. So we'll have plenty of optionality. One, we have to we do have to go ahead and retire that because they do expire.

Speaker #4: Thank you very much. We're going to take one more question and bring it in for a landing. Number 14.

Speaker #5: And we'll determine if we take out all of it or a portion of it. We'll evaluate that in the fourth quarter.

Speaker #2: All right. And our last question is going to come from the line of Roland Mayer with RBC Capital Markets. Your line is open. Please go ahead.

Speaker #8: Thank you. I appreciate that.

Speaker #5: Thank you.

Speaker #4: Thank you for squeezing me in. I hate to make this last question about buybacks, but you have an upcoming debt maturity that you have said you intend to repay.

Speaker #2: Thank you. And I would now like to hand the conference back over to Pal Brown for closing remarks.

Speaker #4: With the buyback commentary, have you thought about maybe refinancing that and being able to buy back more stock?

Speaker #8: Thank you, Michelle. We appreciate everybody's time and energy today. We in wrapping up are pleased about the future relative to organic growth, to our technology, and AI.

Speaker #6: Hi, good morning, Matt, Roland. We'll evaluate that as we go into the fourth quarter. We have $400 million coming up for maturity in December.

Speaker #6: And we have very good cash flow, so we'll have plenty of optionality. One, we do have to go ahead and retire that, because they do expire.

Speaker #8: Three, Sherry purchases. And four, a debt paydown and selective M&A. So we look forward to talking to you next quarter. Have a nice day.

Speaker #6: And we'll determine if we take out all of it or a portion of it. We'll evaluate that in the fourth quarter.

Speaker #8: Thank you.

Speaker #4: Thank you. I appreciate that.

Speaker #6: Sure. Thank you.

Speaker #2: Thank you. And I would now like to hand the conference back over to Pal Brown for closing remarks.

Speaker #4: Thank you, Michelle. We appreciate everybody's time and energy today. We in wrapping up are pleased about the future relative to organic growth, to our technology, and AI, three, share repurchases, and four, a debt paydown and selective M&A.

Speaker #4: So we look forward to talking to you next quarter, and have a nice day. Thank you.