longterminvestor

Here is J. Powell Brown in the flesh....

Harper and others are just doing what everyone else is doing in AI writ large. They are calling themselves "AI Native" while doing it manually for now until AI actually can provide real value for the buyer and seller. Harper is just a broker with a slick intake website. Period. Nothing proprietary with what they have. Harper, and others, could be "working on" something cool in future, but as of now - they are just doing it the old fashion way. "AI in the streets, phone calls/emails in the sheets". hahaha My opinion, AI investments will come from carriers. There are only a few brokers who have the balance sheet to truly "invest in" AI.

Howden just poached 200 people from Brown. things are spicy https://www.linkedin.com/posts/imtreyshields_howden-just-pulled-off-the-biggest-heist-activity-7408246245443555328-KVmO?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAA3fvwBg-mJgrhgapvPP7PwTz-0KlJlnmA https://www.insuranceinsiderus.com/article/2fqq13prblqsvndy1z5kw/all-topics/talent/howden-continues-poaching-blitz-with-200-brown-brown-raid?zephr_sso_ott=nmx8NG

Here's a situation where broker can provide value. Reviewing a deal, premium spend is $335K. That's worth roughly $40K revenue/commission, that will get some attention around the office. Crack open 200+ pages of policy and find this endorsement (see below). Seems understandable to any financial mind - $129M sales X $2.60 Rate = $335,400 premium. But read the audit provision. Carrier, this case Lloyds, has agreed to provide a 10% growth factor on sales and waives audit in event sales growth are within 10% of reported exposure at inception of policy. Meaning if after audit, business has gross revenue of $141.9M or less, audit is waived. However, if after audit, business did $142M or more, they have to pay at account rate of $2.60 for the delta. On $12.9M sales - that's an invoice for $33,540 premium owed. A smart intelligent, motivated to sell insurance broker can do a lot with this endorsement depending upon the financial sophistication of the client. A run-of-mill broker wont even read the policy and just say "I will get a cheaper option for you". The intelligent broker will show this endorsement to client and say "What did your incumbent broker say when you asked for the 20% growth factor in policy Lloyds is showing you here? Why was the 10% box checked?". That will spark a deep conversation about business growth plans, history of business, or maybe never knew that provision was in there, my broker never showed me this endorsement which could lead to "How long have you been with Lloyds cause if its been 5+ years, you may be eligible for the flat/no audit provision here". Even still more creative, broker could break it down to premium savings and say "Mr. CFO, you have this 10% growth factor here - how sure are you on the $129M revenue estimate?" Answer comes from Mr. CFO "Take that $129M to the bank, its locked in and we can't grow any more than that anyway". Here's the savings. "Okay Mr. CFO, may we recommend at renewal you report $118M, which equates to a $29K premium savings, and when audit comes back at $129M, you are within your 10% growth factor and you won't owe any money at audit, take the $29K and bonus that to your staff for a great year." Sign here if you want me representing your insurable interest in this transaction! Boom! There's just so many ways to break down accounts, look at things, be creative as a broker and add value. This is just 1 of 1000's of things that are dependent on another 1000 factors so its exponentially complex. Client needs, market conditions, class of business, shortages of capacity, over capitalized markets creating more endorsements to mess with premiums, audits, exposure changes, new CFO, new carrier, carrier goes belly up mid term and you gotta find a new one, new bank wants weird language you have to comply with, business got sold new owner, building is old with old roof, claims problems, service problems, list goes on... Unfortunately there are so many bad experiences, the policies are boring to read and complicated to understand - folks don't know how much optionality is out there - they don't know what is possible because no one reads this stuff. Most brokers don't really care about getting the best execution for client - they just want to make their $40K commish - and that's understandable. I guess to further your point @Munger_Disciple, there is truth to what you say. There are many brokers who do not add value and are order takers, but that does not mean all brokers do not/can not provide value - a good broker can provide a ton of value. Maybe AI helps brokers provide more and more value over time. ENDORSEMENT:

How can you hate on the business model? Double billed client and broker still doesn't get fired? What a business! Win for brokers. sorry for your bad experience but it does prove the point.

Them fighin' words...hahaha. Brokers don't add value? Add value to those that buy insurance or take the risk? Regarding buyers of insurance, there are many scenarios where clients have called 50 insurance companies and can not get insurance, call a broker and options suddenly appear. Clients inherently dont trust insurance companies either and want a broker to recommend ways to reduce spend/or increase coverage. Client might be negotiating a contract and needs certain coverages. Client might be getting a loan and needs certain coverages that the bank requires. Lots of value on lots of levels. Regarding insurance companies, where do you think the risk comes from? Just magically appears? The brokers serve up the risk and collect the premium for the insurance companies. Brokers gather all the really annoying documents to "present the risk" so an insurance underwriter can make a decision. Applications, questions about the risk, addresses for properties, limits, construction type, elevations, loss history on the risk. And lastly, a company underwriter will depend on that data being accurate and holds the broker responsible for accurate information. Brokers are also responsible for getting the money, brokers are in the collections business big time. Insurance companies want their money up front and brokers have to get it for them. You want to do a simple transaction in insurance, that is fine - AI can have those. But insert a chemical processing facility that just so happens to have a 1200 student lower school across the street with kids or sexual abuse/molestation coverage on 1500 medispa's. Gonna need a broker for that. And the world is getting more complex, not less. Think about the paper work you need for a mortgage today? Multiply that out and thats similar to what a middle market insurance account looks like. Some clients sign whatever is asked no problem, other clients want to read every line. In the future, maybe the insurance companies try to intermediate the way risk/premium gets deal flow. There will be some. However, be mindful that clients will want a broker to represent their interest in transaction.

Top level analysis - maybe the best "deal" Baldwin has struck. CAC LTM 2025 revenue of $300M. Purchase price of $1B ($438M Cash / $589M Stock). 3.33X Revenue. Tough to suss out true EBITDA because of Baldwins use of use forward looking proforma adjusted numbers. Lastly, I am personally surprised CAC couldnt get a higher valuation from someone else and Baldwin was the chosen partner moving forward. Reality sets in here that valuations have 100% come down. CAC Group Partnership.pdf

Baldwin merging with CAC. w...ooo...w https://www.businesswire.com/news/home/20251202612384/en/The-Baldwin-Group-and-CAC-Group-to-Merge-Creating-the-Largest-Majority-Colleague-Owned-Publicly-Traded-Insurance-Broker

The emphasis was more on the gap between price and value noting market was not accounting for the $1.7B in sales recently acquired rather than anchoring on an appropriate multiple of sales. Although you bring up good points, what is the appropriate sales multiple, integration risks for acquisitions, acquisitions overall, and market cycles. 5X sales was a "dart on a dart board" round number based on all acquisitions for the industry going back to 2023 of all shapes and sizes (3 years worth of acquisitions). Highwater mark was the US Assure deal Ryan paid 8.8X. Truist (80%) was 4.2X but there was a previous deal in 2023 selling the first 20% at the 4.2X multiple. AON paid 4.9X for NFP. AJG paid 4.5X for Woodruff and 4.2X for AP. There was a large deal in Australia that traded at 6.4X. McGriff cost Marsh 5.3X. I am basically citing the larger transactions over the previous 3 years here. Is 5X high? Maybe, maybe not - the pool of "would be sellers" is getting smaller, not larger. There is something else I have thought about with relation to broker acquisitions. We as investors have an array of assets to purchase - almost identical to sitting in the vegetable section of a supermarket. The entire section of vegetables is available to us investors - pick your option and pay your price. Insurance brokers are relegated to the "proverbial" tomato only section. Now there are many (too many) types of tomatoes available however insurance brokers can only buy tomatoes. Does that mean they are experts in the art of buying tomatoes? Maybe. Do the brokers know that market better than anyone? Or are they arbitrarily bidding up the price of tomatoes amongst themselves? All the while, we investors can watch the tomato prices and just go buy/eat lettuce if we want to, we investors have that option. Something I have been thinking about. And it applies to all industries with acquisitions, not just insurance. There was also an emphasis multiple of sales being a crude metric. My lens on the price paid for businesses in brokerage has changed somewhat overtime. If you see some pervious posts I am loudly saying "These are nosebleed multiples". However I have come to learn more over time that certain acquirers are better/can produce better results than other acquirers. Cash flow generation is a key metric there - some are experts and others just pretend. This is what some might refer to as integration or integration risk. Integration of a business purchased at AON or AJG looks very different than at BRO or RYAN. Finding the businesses that can extract more profit from revenue is the key, obviously. Some places you will have to learn all new systems and get new management and other places you might not even get a new business card - they allow you to trade under the same name - with little change (except for producer comp which will get chopped). Addressing the hard/soft cycle - if the financial markets are selling brokers in a soft market and buying in a hard markets - LET THEM! That's the opportunity. No one could have predicted the hard property market on 2021-2023, it just happened. Or the softening D&O market. What about auto rates in NY? An insurance brokerage business who will be here forever is no less/more valuable - they will transact in all market conditions. Yes - brokers make more in a hard market and less in a soft market. And if your ultimate goal is to build-to-sell, then you want to find XYZ broker to acquire your heavily weighted property firm in a HARD market with elevated revenues. XYZ broker SHOULD know to discount the sales appropriately knowing the sales are arbitrarily high in the cycle due to property rates being elevated. KEY would be, does the XYZ broker properly discount and not overpay. Or if you are the seller, you want XYZ Broker to be non-the-wiser. The caveat, I guess, is if XYZ Broker is going to own it forever then paying up, slightly, is not so bad over the long pull.

My opinion - current BRO price is not accounting for the $1.7B of additional revenue recently acquired with Risk Strategies. Plainly, using the most crude valuation metric of multiple of sales - 5X - for a very much "back of the envelope" valuation. Pre-acquisition TTM rev was $5.5B at 5X = $27.5B Add $1.7B (7.2B) and you have $36B current market cap is $26B $10B is a pretty decent margin of safety. Yes - shareholders of Brown were diluted slightly with share issuance to acquire Risk Strat. Which skewed the EPS print on recent quarter which showed a "reduced EPS Quarter over Quarter". I believe that spooked some folks. Actually we should want Brown to trade lower so the effects of the $1.5B buy back will be more accretive to shareholders.

BWIN 3Q24 Earnings Call Transcript.pdf see also the conference call transcript refuting some of the allegations. interesting chatter.

Short report on BWIN. Dated Oct 2024. Blue Orca is Short Baldwin Insurance Group, Inc..pdf

Dont know who has the AI edge anywhere as a "non-tech" business leveraging AI, let alone insurance brokers trying to win the AI race. I personally find it hard to trust any management who says they are leading in AI. I do not definitively know if AON management is saying they have an AI edge, however the VIC write up is saying AON has an edge. What I do know is AON have a solid business advising on "how to take risk" rather than just "buy transactional insurance". Use of AI can be helpful in designing a complicated risk taking/risk ceding arrangement with all the data to support models ect - the data to make risk based decisions will be gold in the AI race I believe - that data is proprietary and could get moaty over time. All brokers have it, including AON, just depends who figures out how to leverage and use to grow topline. VIC article specifically speaks to AI being helpful in the service center, which could be true - I do not know. But servicing insurance clients generally (think call center, 1-800) using AI does not seem like a moat - seems like a white label bot that any insurance broker can tap into. My thoughts now and given the pace of change/innovation I reserve my right to change my opinion.

Only takes I have for you without picking one over other: - BRO is as close to "pure play" insurance brokerage as you can get vs. MMC being 37% "Consulting" - MMC is a truly global business vs BRO being mostly US and some Europe (would say BRO is growing internationally) - MMC has best of bread reinsurance broker "Guy Carp" where as BRO has little/no reinsurance brokerage - MMC traditionally gone after institutional business under Marsh brand and in 2009 started building out a middle market brand called "MMA" which is a nice business tucked inside MMC vs BRO who has everything except a large institutional biz (they do have Beecher Carlson brand but small compared to MMC institutional clients), BRO really wants to own middle market

I had previously promised a post on ERIE and a new thread in "Investment Ideas" started under ERIE. I posted commentary there, hope its helpful. cheers!

The GOAT, Mr. Warren Buffett himself, is saying to grow GEICO, we can not do it ourselves. We, GEICO, can afford to pay the broker rake. So after 85 years of fiercely advocating the selling/servicing insurance using our own employee force, "direct channel", GEICO is waiving the white flag and turning to the insurance brokerage distribution channel with a mega phone. Watch the video. It is a plead to insurance brokers. This is an insurance company we all know - this is not "Shifting Sands Mutual". This is GEICO saying "Mr. Broker, sir, we respect your specialized support, customers turn to you for expertise, customers depend on you, you can depend on us, we promise to be your true partner, we want your business". Notice the positioning. GEICO respects the business is owned by the broker and the broker can move it to who ever and where ever they want. There is another side to this coin...the dark/hard market...what Mr. Ajit Jain and Mr. Buffett really love, when the insurance companies set the rules/price. Think toughest risk imaginable, asbestos, hurricanes, wild fire, those are the markets where the biggest ego brokers are rolling around on the ground begging to get someone to write it. Those markets exist and will happen in future...brokers still win because the premiums are larger and broker comp is tied to premium...inflation protected. come on......is this evidence insurance companies need brokers? I don't know what could be more of a smoking gun.

dealraker....you have inspired my own rant. here goes. Insurance carriers collect premium in exchange for promises to pay at a later date, those claim debt promises may never come, or they can come large & lumpy, at a drip pace, or over a very long time depending on life of the risk, known as short tail (think property insurance or physical damage for autos where claims are paid within a 12-24 month period) or long tail business (think work comp or pollution that could take decades). A typical Insurance company collects $100 of premium, runs costs at about $80 for things like Claims/Losses, Loss Adjustment Expense, and some other misc expenses/taxes. Typical underwriting profit is about $5 on that $100. That leaves a remaining $15 on the $100....where...does...that roughly $15 or 15% go? The rake goes to BROKERS, the distribution system that feeds insurance companies mountains of wanted/needed risk to run their business. And for the broker, ZERO balance sheet risk when an account is written vs. when an insurance company writes an account, the liability account grows on on balance sheet - called "float". The difference between a poorly run/well run insurance company is partly judged on how well float is managed but I truly believe the difference maker is more on underwriting profitable business. Return on float is a business, costless float or negative cost float is great/amazing business but the float can evaporate with bad underwriting. A poorly run insurance company wakes up every day saying "I need to collect money today to pay for claims made yesterday...and I need that premium so bad I will knowingly take poorly priced risk just to get back to even". A poorly run insurance company is like a contractor who needs the deposit from a new job to pay off the job(s) they haven't finished. A well run insurance company...well this crew knows what a well run insurance company looks like...dont need to go down that rabbit hole. In comparison, a poorly run insurance brokerage doesn't have to do anything, the 15% just rolls in - "the renewal". You wanna know what rocket fuel looks like in business? Look at a well run insurance brokerage who grows organically year in/year out while being acquisitive. It's...a...growth...machine. Insurance company goes out of business, non-renews an account, or raises price/reduced coverage - opportunity for broker to to swoop in, strengthen relationship with buyer holding their hand saying "we will get you through this tough time, we will find you a new carrier, not to worry". Its like the cartoon cat with the feather sticking slightly out of his mouth. Brokers take the $15, run at 35% operating profit and deliver $5.25 of real, take to the bank income while the insurance company, using the same $100 of premium, operate a daily tight rope walk exercise for $5.00 while sweating "the big one". Someone tell me what the better business is, cause its clear to me insurance distribution is a darn good one relative to risk bearing. and commissions as percentage of premium? They have only grown over the past 10 years, boggles the mind actually that they have grown. Now, rocket fuel in risk bearing is Progressive (PRG) - but they are not a typical insurance company. Mr. Market will tell you that, trading at 5X+ Book. Progressive has been leveraging AI before we even knew what AI was - ie "Telematics" and the "The Bunker" which is a huge data center Progressive has been running for years. Hence the valuation. Progressive was also one of the first insurance companies to "transition" from paying the 15% rake to agents and go direct. Progressive successfully runs a blended agent placed/direct placed business model. Pretty amazing actually how Progressive pulled that off. Believe its mostly because Progressive agent force needs Progressive more than Progressive needs its agent force - typical Progressive agent is a small business (no scale, 1 store front, family run) and can not command market moves/bigger commission splits like big brokers do with other carriers - its just a different insurance business. AI and brokers. AI will take care of tedious, small, VERY repetitive, clerical tasks for brokers which will free up time for customer service staff to be more client facing and actually give a better work environment. Will also cut costs for brokers - time will tell how good AI can get - if it gets really good, brokers will be more profitable. Owning PRG vs Brokers. Don't have an opinion, just know brokers will be fine over time and Progressive is a machine. Will be fun to watch Progressive vs. GEICO, what a Formula 1 race to watch with no finish line because both are "forever businesses". Lastly, because we are all talking about what we are all buying. I recently bought sized up my RYAN. I also, finally, after staring at BRO for 11 years I bought a nice chunk. (Previously owned BRO and sold to use proceeds as seed capital to start my business). I own them because I understand the businesses extremely well and believe with some sense of certainty, both RYAN and BRO will be bigger businesses in 7-10 years. Will they be 50%, 100%, 200%+ larger? or only 25% larger...who knows...and thats the bet. They will be larger, they have to be larger...BECAUSE INSURANCE COMPANIES NEED TO BE BIGGER IN 7-10 YEARS. Forgetting shareholder return and capitalism. We are talking about the economies/communities/cities/developments/businesses underpinned by insurance will be larger and new ones will start. Homes, cars, businesses, city footprints, vessel counts, airplanes flying, workers working, healthcare costs tied to insurance premiums tied to broker commissions, ANYTHING AND EVERYTHING needs insurance because a bank requires insurance, a contract mandates insurance, and state/federal law requires insurance. And the broker 15% rake is so ingrained in the distribution, its wild. The questions are: How can insurance companies get rid of brokers? How long will that take for AI to rid brokers of the distribution? What will cause buyers of insurance to trust an incentivized insurance company selling insurance directly vs. an independent broker who specializes in representing the buyers interest in transaction who is compensated by the insurance companies using the buyers money(premium)? What other business has that kind of value chain? genuinely curious...can not shake from mind either the memory was brokers did not do "as well". During 2008-2009 when exposure unit drops compounded with soft insurance market pricing, the double whammy is a head wind to overcome for brokers. Cant time anything like that, could happen anytime - no ones actually knows. If you think insurance companies are actively trying to figure out how to get brokers out of distribution. I am sure they are but our friends at RYAN (and other wholesale only shops) have gotten insurance companies to brand themselves as "Wholesale Only" markets meaning they will never take the wholesaler out of the distribution chain cementing RYAN's (and others) place in a world of insurance and when you have wholesale only, there will need a retail facing broker to represent the buyers interest in the transaction. Beyond 7-10-15 years, picture becomes less certain due to tech and other AI powered solutions, but certain enough for my money today. and if the brokers drop another 25% near term, I have dry powder ready. Cheers.

Good question. This is Wholesale FL only so its hard to read the tea leaves. Any retail agent could be moving accounts away from Brown and into AmWins. Even Brown retailers could be leaving Brown owned wholesalers and moving into AmWins. Florida specifically, the AmWins FL Property team(s) is/are HUGE and will continue to grow. Could be a retailer just gets hot with a particular team and starts moving business to a new outfit - more commission or just relationship. The bigger piece of the pie is on the retail side and Brown is growing net in Florida so its something to see but wouldnt concern me as a Brown shareholder. Obviously Brown wants both "bites of the apple" (retail and wholesale getting the deal) but retail is forced to go where the hot markets are and if AmWins is hot, then the book moves - thats capitalism. Other Retailers will not move away from wholly owned wholesalers and that could hurt them in long run if client shops...or what client doesnt know, doesnt hurt them i guess? Both AmWins & RT have put alot of boots on the ground to drum up business as pure Wholesale only plays.

I was looking at these filings. Question for the group. There is a large list of "entities" with names that look like affordable housing - probably for the tax credits. Berkshire/Mr. Buffett has always said they don't love the real estate business however it seems there is real estate in here with the names. Anyone know what these are? for example:

I was wrong, seems like someone is compiling E&S data by broker in Florida. Data could be spotty but better than nothing. one would have to crack the state insurance website and figure out how to source. I have never tried to figure it out but obviously people are doing it.

Cat exposed property is starting to see rate reduction, 10%-30% down. Will see more if storms are light this year. This is coming off one of the meanest "hard markets" in a while so with property in general, if rates drop 40%+ and they would be closer to "mean" but still elevated. Cat Property lows were in 2014-2016 and its been a rocket ride since. Difficult to say how much each brokers book is aligned to property, more specifically cat exposed property. Its exactly like calculating stock returns, $100 stock goes up 100% you're at $200, 40% reduction from $200 gets you to $120 - still more than the $100. All the ones we talk about write alot of property but as a percentage to overall revenue tough to gauge. Homeowners premiums are up and most (all?) big brokers dont pay a commission to the producer on personal lines so that helps. Casualty rates (GL/Excess) are seeing sustained rate in a hardened market with no signs of softening in the near term. Some accounts you cant get reasonably priced excess. In some cases you cant get sufficient coverage and clients still buy the inadequate policy so the revenue still shows up for the broker. Professional Lines/Specialty Lines - E&O/D&O/Cyber are still soft and have been for 3-5+years in pockets. This is just part of the cycle - so if you were trying to model it, it would be tough because ultimately the carriers set the pricing and thats based on need for cash flows. If a risk bearer needs premium, dropping the price is the quickest way to get immediate cash and brokers are incentivized to show those options to insured because if they don't, another broker will. Smart brokers will find risk bearers who want to deploy capital and take risk. The other side of that coin is exposures - which have been inflated up so that will help keep premiums higher (and commissions for brokers) than they were on the same account lets say 3-4 years ago. For example specifically with property account, a $10M insured building for replacement cost in 2019 is now a $16M-$18M insured building (due to inflated building costs like concrete, labor, roofing material ect) - dont know how brokers will be able to negotiate the replacement cost down to pre-COVID levels - the aggressive clients will want that so it will be a dance. Broker organic growth revenue for property accounts came from both inflation on values and the hardened rate environment - don't know if public brokers explained that but it is what happened. Needed to be trued up tho. Brokers find a way to fill the holes. When a customer sees a large reduction in premium spend, brokers will sell additional limit or other products to relieve risk from client, helps client and gets some additional revenue for broker. Other example if loss ratios are low, the contingent payments will help - contingents are the payments from risk bearer to brokers for profitable business written. Its a unique business, there is no account relationship that makes up 0.1% of the big guys so even if they lost their largest client, it doesnt even show up on the radar. That's kind of incredible - a slightly larger risk would be losing a relationship to carrier, they blow up/stop writing, and broker has to re-hang all the business, the broker will still show revenue but there will be a labor burden to place all those deals.

There is a large probability Mr. Buffett and other managers at BNSF have looked at the below map for many years, long before recent news broke on other competitors consolidating. I am no Rail Road expert, the below looks sexy however I choose to trust management - mostly because between me and Mr. Buffett, we control roughly 30% voting rights of Berkshire .

https://pocketcasts.com/podcasts/334745e0-6b62-0139-342a-0acc26574db2/f57368a2-a559-4fd7-8b41-1f5dd73244ae?utm_source=substack&utm_medium=email Little podcast for the group - PE Firm GTCR interview about Insurance Broker landscape and general business mechanics. Nothing in here is new. Just a few little trinkets and some refreshers on broker model. At the tail end they discuss a very brief history on building AssuredPartners (will be sold for $13B+ to AJG).

Thoughts from news and conference call. Significant buy from BRO. Accession (#9 world wide in distribution) is a big business. Accession, a PE Backed roll up, is the entity however the names in trade is Risk Strategies/One80 (RS/180). BRO knows the majority of the businesses acquired by RS/180 well - BRO has competed against these businesses for accounts or courted them for the acquisition and got outbid or seller went with RS/180 for their reasons. Its an acquisition breaking BRO into top 5 brokers world wide. BRO will consolidate into 2 divisions - Retail & Specialty (combining Programs and Wholesale) – speculation because it provides less insight into business from competitors and there could be some insurance carrier reasons as well. As of 2024, BRO has roughly $2.7B of Retail sales & roughly $2B of Specialty sales. RS (retail) is roughly $1.2B sales & 180 (Specialty) is $500M. That's a 45% increase in Retail sales and a 25% increase in Specialty. Represents a 36% increase in total revenues for BRO going from $4.7B to $6.4B. BRO is obviously keeping up with the arms race of large acquisitions to stay in the game. At $9.825B Price on $600M of EBITDA, 16.375X EBITDA or 5.77X Topline – these are elevated multiples from previously announced acquisitions in Insurance Distribution of similar size however BRO is making a splash here. $1B-$2B Revenue Brokers is rare air, $2B+ is less rare with more players however majority are “Not for Sale”. $1B-$2B Billion revenue club has 5 members going to 4 now that Accession is part of BRO (1 Public, 3* PE Backed & 1 with Permanent Capital)-*now 2 PE Backed. $2B+ Billion revenue club has 11 members going to 10 (5 Public, 4* PE Backed, 1 Permanent Capital, 1 Private) - *1 PE Backed player is already under acquisition, AJG buying AssuredPartners,– some speculate AJG/AP may see regulatory hang up calling it dead but the news will be interesting to follow. Overall, PE Backed brokers have loaded up with debt and are reaching end of life with rates increasing and refinancing imminent. BRO tried to buy HUB (Now #7 overall) maybe 10 years ago – both firms were roughly the same size at that time. BRO could not land the plane or HUB got spooked (doesn’t matter what happened, both firms have continued to prosper). Point being BRO has been at the table before considering a significant deal in scope. This time, Mr. Brown and team, were able to consummate the deal. BRO will have to issue $4B of equity to swallow this – RS/180 folks will taking 14% of purchase in stock as well with a lock up period – continues the culture BRO is perpetuating as a “Team Mate Owned Firm”. Going from 286M shares outstanding to 326M shares, increasing shares outstanding by 14%. I don’t know if the equity issued to seller is inside that or additional and if one was truly curious its in the filings somewhere. Debt levels will be manageable due to the huge cash flows provided by enterprise. BRO has seen these levels previously in terms of % with previous large deals consummated and has been able to get under control/manageable. CFO Andy Watts touted recent credit upgrades from Fitch/Moodys to BBB or equivalent. Interesting side note regarding debt, BRO & Accession as of March 31,2025 had $3.731B and $4.574B of long-term debt respectively. Let that sink in. BRO with market cap of $30B and $4.7B revenue (pre acquisition) had $3.7B of Leverage and Accession at $10B val with $1.7B of revenue had $4.5B debt! Seems like the PE sponsor needed to pay their debt rather than run a great business. Win for BRO and so goes the long saga of insurance brokerage growth. The train continues down the track.

Don't fall asleep reading 145 pages of WTW's "Price Predictions". If you not gonna read the whole thing, the cliff notes are: - individual sectors of the insurance market and how they price differently - each line of business has no correlation - complicated nature of the market and need a broker to navigate (For example, I can think a a handful of accounts who do $25M in revenue that touch 10-12 of these markets through 1 owner/CEO making the final decision.) Maybe WTW just throws this at a client to say "You see how hard this is?" in reality client will just stay with incumbent carriers. I am working on an Erie post as well, might as well post my commitment so you all can hold me to finishing - NERD Alert. insurance-marketplace-realities-2025-spring-update-v2.pdf