Brown & Brown revenue up nearly 17% in third quarter

Brown & Brown Inc. on Monday reported 2019 third-quarter revenue of $618.7 million, up 16.8% from the third quarter of 2018 as commissions and fees grew sharply with acquisitions.

Commissions and fees increased 16.5% % in the first quarter to $617.5 million, and quarterly organic revenue grew 3.4%, according to the brokerage’s Monday earnings statement.

The brokerage acquired six businesses with annualized revenue of approximately $36 million, said J. Powell Brown, president and CEO, speaking Tuesday morning on an earnings call with analysts.

He added that over the first nine months of the year, 18 deals have added some $86 million to the Daytona Beach, Florida-based broker’s bottom line.

Third-quarter net income was $115.6 million, up 9.0% from the same quarter last year, the statement said.

“For the third quarter, we continue to see businesses invest additional capital, hire more employees, and grow their companies, ultimately expanding exposure units,” Mr. Brown said on the call.

Brown’s retail segment saw third-quarter organic revenue growth of 2.9% and total revenue growth of 29% driven “primarily” by acquisition activity, according to R. Andrew Watts, Brown & Brown’s executive vice president, chief financial officer and treasurer, speaking on the call.

Year-to-date organic growth in the segment was 4.0%, compared with 2.8% for the year-ago period, he said.

The national programs unit saw organic revenue of 1.6%, blunted somewhat, Mr. Watts said, by a one-time charge. The wholesale brokerage unit saw 11.0% organic growth and total revenue growth of 11.7%.

The services unit had a third-quarter organic loss of 0.7% as claims from its Social Security advocacy business declined with the completion of a contract, Mr. Watts said.

Revenue for the nine months ended Sept. 30 totaled $1.81 billion, up 20.4% over the year-ago period, as commissions and fees increased 20.3% and organic revenue grew 3.1%, the earnings statement said. Nine-month net income was $322.0 million, up 18.9%.

The third quarter saw further rate increases, Mr. Brown said, in most commercial lines. Commercial auto continued to see 5% to 10% rate increases across almost all insurers, Mr. Brown said.

Placements in the excess and surplus markets for catastrophe-prone properties, including wind and quake, were up 5% to 15%, he said, adding “there can be outliers.”

Most professional liability rates for private companies are flat to down, but public company errors and omissions and directors and officers coverage is up 5% to 15%, Mr. Brown said.

Workers compensation rates in most states are down 2% to 5%, Mr. Brown said on the call.

Rate increases will persist through the fourth quarter and into 2020, he said on the call.

“We expect most rates to continue to increase slightly in the fourth quarter and into early next year,” Mr. Brown said on the call.