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Brown & Brown Inc. reported third-quarter revenue of $770.3 million late Monday, a 14.3% increase compared with the same period last year, with organic revenue rising by 8.5%.
The revenue hike was driven by new business, good retention levels, rate increases and some expansion of exposure units, J. Powell Brown, chairman, president and CEO of the Daytona Beach, Florida-based brokerage, said on a conference call with analysts Tuesday.
Going forward, rate increases will likely moderate in many lines, but other lines, including cyber liability insurance, will continue to see sharp increases, Mr. Brown said.
Brown & Brown’s third-quarter profit increased 9.3% to $146.4 million.
For the first nine months of the year, revenue increased 17.3% to $2.31 billion, up 10.8% on an organic basis, which excludes mergers and acquisitions and the effect of foreign exchange movements.
“The year-to-date results are the best in our history,” Mr. Brown said.
Across its four business sectors, retail organic growth for the third quarter was 8.3%, national programs grew 13.2%, wholesale was up 5.1%, and services, which includes claims services, was up 0.5%.
Brown & Brown, which has a long history of growth through acquisitions, completed seven acquisitions in the third quarter with total annual revenue of $21 million. Year-to-date, Brown & Brown has closed 11 deals, with total annual revenue of $65 million.
Brokerage valuations “continue to be at the very high end of the range, and I don’t see that change in the near to intermediate term,” Mr. Brown said.
Insurance market conditions, which have seen sharp increases across numerous lines over the past several years, vary by policyholder, he said.
“Customers with good loss experience are getting the best rates and coverage, while those with tough loss experience are seeing material rate increases or reductions in available limits or both,” he said.
In general, admitted market rates were up 3% to 8% across most lines during the quarter, except for workers compensation, where rates were down 1% to 3%, and commercial auto, where rates were up 5% to 10%, Mr. Brown said.
In excess and surplus lines, most rates were up 10% to 20%, though coastal property rates for both wind- and earthquake-exposed properties were up 10% to 30%, he said. Professional liability rates were up 10% to more than 15%, while cyber rates can increase “dramatically” depending on the security protocols of the customer, and umbrella liability rates were also up significantly, Mr. Brown said.
“We anticipate that premium increases will continue to moderate for many lines, with the exception of cyber, professional, excess and automobile,” he said.
2020 brokerage revenue: $2.61B