Brown & Brown Underwhelms Though Insurance Pricing Remains Healthy

Jan. 25, 2023 11:52 AM ETBrown & Brown, Inc. (BRO)AJG, AON, MMC2 Comments
Stephen Simpson profile picture
Stephen Simpson
18.34K Followers

Summary

  • Brown & Brown had a better-than-expected quarter, but the underlying results weren't as strong, and the market didn't like the low single-digit organic growth in the Retail business.
  • Insurance brokers are generally seen as defensive, but the sector is vulnerable to a slowing economy and the end of a once-in-a-generation hard insurance market.
  • Industry-wide derating is a risk, despite brokers' defensive credentials, but I believe underlying cash flow, earnings, and EBITDAC support a fair value around $60 to $65.

Insurance company client take out complete insurance concept. Assurance and insurance: car, real estate and property, travel, finances, health, family and life. 3d render yellow

Phiwath Jittamas

These are interesting times for insurance brokerages. A slowing economy is generally not so supportive for these businesses and neither is the late state of a hard insurance market. On the other hand, these companies are poised to benefit from

This article was written by

Stephen Simpson profile picture
18.34K Followers
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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