Brown & Brown CEO says economic outlook remains positive

The top executive at Brown & Brown Inc. said on an earnings call Tuesday that the outlook for economic expansion remains positive despite uncertainty over tariffs and inflation but that the brokerage expects a return to more traditional organic growth levels.

Brown & Brown reported Monday after markets closed that first-quarter revenue rose 11.6% to $1.4 billion driven by a 12% increase in commissions and fees and 6.5% organic growth during the period.

Net income rose 13% to $331 million. Investment and other income declined to $19 million from $21 million in the prior-year period.

Revenue in the Daytona Beach, Florida-based broker’s retail segment increased 12.5% to $907 million, with 4.1% organic growth.

The programs segment saw a 10.1% increase in revenue to $328 million, with 13.6% organic growth; revenue in the wholesale segment rose 12% to $159 million, with 6.7% organic growth.

Brown & Brown completed 13 acquisitions in the first quarter, representing estimated combined annual revenue of $36 million, J. Powell Brown, president and CEO, said during the earnings call.

“Competition for high-quality businesses remains,” Mr. Brown said.

From an economic perspective, inflation, tariffs and interest rate changes are expected to impact growth in the coming quarters, he said.

“Until there’s a resolution regarding the extent and breadth of tariffs and inflation, companies will more than likely have a cautious bias,” Mr. Brown said.

Some businesses are putting new projects on hold for a few months, he said.

From an insurance pricing standpoint, rate increases for most lines continued in the first quarter and were fairly consistent with the prior few quarters, but they are moderating slightly compared with last year, Mr. Brown said.

Auto and casualty remain the outliers, with rate increases still rising, while catastrophe property rates continue to soften, he said.

“Rates in the admitted P&C market moderated slightly as compared to last quarter and were up 2 to 7% for most lines versus the prior year,” Mr. Brown said.

Workers compensation rates were flat to down 5% in the quarter. Rate increases for noncatastrophe property were in the range of flat to up 5%.

In casualty, rate increases for primary and excess layers were consistent with the previous few quarters. Excess casualty rates increased by 5% to 10%.

“Placing higher limits or layers continues to be very challenging,” Mr. Brown said.

Excess and surplus catastrophe property rates were down 10% to 25% during the quarter.

“In some cases, rates were down in excess of 25%. With the decline in rates, some buyers chose to increase their limits or modify deductibles, while others realized the savings,” Mr. Brown said.

“For cat property, we believe rates will continue to decrease in the second quarter and could be down in the range of 10% to 40% due to the availability of capital,” he said.