2022 brokerage revenue: $3.56B
Percent increase: 16.9%

Brown & Brown Inc.’s international expansion continued with significant acquisitions in 2022, and new business and rising insurance rates also contributed to solid revenue growth for the brokerage.

“We were really pleased with our performance last year, starting with the organic growth in the business of about 8.1%,” said J. Powell Brown, president and CEO. 

That organic growth was less than the 10.4% in 2021 but was still high when compared with historical averages, said C. Gregory Peters, managing director-equity research with Raymond James & Associates in St. Petersburg, Florida. “Last year, from an operating perspective, they had a pretty good year,” he said.

Brown & Brown reported 2022 brokerage revenue of $3.56 billion, a 16.9% increase over the previous year. The company is No. 7 in Business Insurance’s ranking of the world’s largest brokerages.

Growth continued through the first quarter of 2023, as revenue for the period rose 23.4% to $1.12 billion. Organic growth was 12.6%, a sharp rise from 7.8% during the comparable quarter in 2022.

Despite its strong performance last year, Brown & Brown’s stock underperformed its peers, Mr. Peters said. However, it has rebounded this year and is outperforming the group, he noted.

The dull stock performance in 2022 may have been due to the market’s reaction to the acquisition of London-based brokerage Global Risk Partners Ltd., and how losses in captives in last year’s third quarter were communicated, Mr. Powell said. “Those are the two things that may have had a downward pressure on it, but I don’t know,” he said. 

The acquisition of GRP — the largest yet for Brown & Brown — was one of 30 deals in 2022 that together represented combined annual revenue of $435 million. GRP, which is largely a retail broker, added $340 million in annual revenue and more than 2,100 employees across the United Kingdom and Ireland.

“The GRP acquisition was an interesting event because it represented a significant initiative to expand into Europe and specifically into the U.K. market,” Mr. Peters said.

Another notable deal last year was the acquisition of the operating companies of BDB Ltd., a Lloyd’s of London brokerage. “BDB does a lot of business in Italy,” Mr. Brown said, and is active in France, the Benelux region, England and Ireland. 

Brown & Brown completed seven deals during the first quarter of this year, with estimated combined annual revenue of $11 million. 

In May, the brokerage announced plans to further expand internationally, agreeing to buy London-based Kentro Capital Ltd. “Kentro is predominately a program administrator but they also have some trade credit capabilities in England, Ireland and Europe,” Mr. Brown said.

As it grows abroad, the brokerage remains “very bullish on the U.S. in terms of acquisitions,” Mr. Brown said, noting that the deals made outside the country do not signal a move away from acquiring U.S.-based companies.

“The most important thing in any acquisition is cultural fit,” Mr. Brown said. “And we were very fortunate to find a number of businesses that fit culturally last year.”

Business is robust this year, which is surprising in some respects, Mr. Brown said. 

“We had thought that if you continue to increase interest rates, the economy has to sort of slow down. We haven’t really seen that yet, and the vast majority of our customers are really busy.”

Still, insurance market conditions remain challenging for the brokerage’s clients, particularly for those that need property catastrophe insurance, Mr. Brown said.

“Their presence in the Florida market, which is seeing skyrocketing property rates, has translated into a very strong revenue opportunity for them, and that’s likely to persist this year and maybe into next year,” said Mark Dwelle, director, insurance equity research at RBC Capital Markets LLC in Richmond, Virginia.

Mr. Dwelle doesn’t foresee headwinds that could stall Brown & Brown’s growth, but he noted that “at some point, pricing across the board will start to slow, and they’re certainly vulnerable to a slowdown in the economy, if that does ultimately emerge. But it certainly wasn’t apparent in the first-quarter numbers and it’s unlikely to be in the second-quarter numbers, either.”