BRO · Q2 2025 Earnings

Bullish

Brown & Brown

Reported July 28, 2025

30-second summary

Note: This brief covers the quarter ended June 30, 2025. The "prior guidance" reference set provided to this brief is forward guidance issued during this same Q2 FY2025 call (for Q3 FY2025), so no separate prior-quarter brief comparison is made here.

Headline numbers

Revenue

Q2 FY2025

$1.28B

+9.1% YoY

Key financials

Q2 FY2025

Metric	Q2 FY2025	YoY
Revenue	$1.28B	+9.1%

Guidance

No quantitative guidance provided in either prior or current quarter; unable to assess beat/miss or guidance raises/cuts.

Segment performance

Q2 FY2025

Segment	Q2 FY2025	YoY
Retail	$0.697B	+7.9%
Specialty Distribution	$0.563B	+8.7%
Other	$0.025B	+78.6%
Retail Commissions and fees	$694 million	—
Specialty Distribution Commissions and fees	$555 million	—

Other KPIs

Q2 FY2025

Segment	Q2 FY2025
Retail Income before taxes	$127 million
Specialty Distribution Income before taxes	$233 million

Management tone

No tone-shift analysis available for this quarter.

Recurring themes management leaned on this quarter:

Pricing softening across admitted and non-admitted markets with strategic differentiationSuccessful large-scale capital deployment (RSC acquisition with $4.4B equity and $4.2B debt)Margin expansion despite revenue headwinds and acquisition-related seasonalityEconomic resilience with cautious customer sentiment on tariffs and investment timingIntegration readiness and organizational alignment post-acquisition announcementStrong cash flow generation supporting de-leveraging strategy

Risks management surfaced:

Tariff impacts on customer investment decisions and economic trajectoryHurricane season effects on cap property rate trajectorySoftening rate environment compressing new business opportunitiesCustomer delays in investment decisions creating revenue volatilityIntegration execution risks for RSC acquisition with 23,000+ employee base

Q&A highlights

Mark Hughes · Truist Securities

Retail organic growth underperformance in Q2 - what fluctuations occurred and how does the strong pipeline shape Q3 outlook?

Over half the discrepancy vs. consensus was due to downward rate pressure; the remainder was lower new business. Management feels good about Q3 pipeline and visibility, noting quarterly variability is normal.

Rate pressure caused >50% of Q2 retail organic missLower new business caused remaining ~50% of missGood new business visibility for Q3Every quarter shows different dynamics

Mike Zuremski · BMO

Is the year-over-year deceleration in organic growth reflecting classic market cycle dynamics or underlying structural issues? Why has deceleration been faster than historically seen?

Management characterizes this as a classic market cycle where property rates rose rapidly post-COVID and are now declining rapidly. Carriers with reinsurance commitments are competing aggressively, creating more rate pressure than historically normal. This is expected behavior, though the speed of decline in Q2 (particularly late June) surprised management. Rate normalization (5-10% down to 1-5% range) is actually healthy reversal of abnormal post-COVID increases.

Property rates historically rise rapidly then decline rapidlyCarriers with reinsurance commitments competing aggressively to deploy capacityQ2 rates were 1-5% (normalized) vs. 5-10% prior year and 2-7% in Q1Speed of decline surprised management, not the decline itself

Gregory Peters · Raymond James

Post-acquisition due diligence on Ascension Risk Strategies and 180 - what is visibility on integration timelines for cost/revenue synergies, and assessment of retail organic profile of 180 given tougher casualty book?

Revenue and expense synergies remain on track for capture over 3.5 years as previously guided. Both organizations have impressive talent and deep specializations. 180 has strong underwriting discipline similar to program facilities, with casualty-heavy book (transportation, tougher classes). Growth profile assessed as substantially similar to core Brown & Brown. $750M set-aside for discontinued runoff operations reflects appropriate due diligence; those operations are not ongoing business.

3.5-year timeline for synergy realization (unchanged from announcement)180 growth profile assessed as substantially similar to core business180 has casualty-heavy book including transportation$750M set-aside for discontinued operations in runoff

Elise Greenspan · Wells Fargo

How does continued deceleration in property rates in H2 impact full-year guidance relative to prior 1% premium guidance? Did slowdown worsen in June?

Rate deceleration (>50% of Q2 miss) must be factored into Q3/Q4 organic expectations. June showed further trail-off vs. April/May. Programs margin benefited from true-up on contingent commission calculation for prior year.

Rate deceleration must be factored into Q3/Q4 expectationsJune saw further slowdown vs. April/May within Q2Programs had one-time benefit from prior-year contingent calculation true-upProperty rates remain under pressure heading into H2

Josh Shanker · Bank of America

Given strong post-COVID growth period and excellent underwriting profitability, should earnout performance be expected to normalize downward? And what has been earnout contribution to organic growth over past two years?

Management does not expect normalization downward of earnout performance. Earnout estimation is rigorous; changes in acquisition earnouts over 10 years have been immaterial. Performance may have been strong anyway even without favorable backdrop. Growth rates in brokerage space are moderating to traditional levels, but acquisitions themselves should not be singled out. Specialty businesses can have disparate growth profiles.

Change in acquisition earnouts over 10 years: immaterial (excluding COVID adjustments)Earnout estimation includes expected strong performance upfrontBrokerage industry growth moderating to traditional levelsAcquisitions counted in organic after year two

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