Insurance Brokers (MMC, AON, AJG, WTW, BRO)

[buylowersellhigh]

1 hour ago, dealraker said:

Bought 370 shares at just below $92.   Will buy more in similar amounts if the price falls further.  Not sure there's a quick rebound coming for a while.  

Based on the call, they said the organic was a mix of 50% soft pricing and 50% writing new business.

[Spekulatius]

I averaged up and doubled my share count here. I think $BRO is very reasonably valued here. The lower organic growth is a concern but there can be noise in any given quarter. I am betting they can continue to march on and generate good returns.

Edited July 29, 2025 by Spekulatius

[thowed]

They

3 minutes ago, Spekulatius said:

I am betting they can continue to march on and generate good returns.

 

I feel like they've certainly earned the right for investors to feel that way.  The call was a bit scrappy - but there was a degree of him saying, almost with an eye roll, you can't tell much from one quarter, guys!

 

Have bought more today.

[gfp]

Small insider purchase at Brown & Brown yesterday, spouse's account technically.  $91.44/sh

https://www.sec.gov/Archives/edgar/data/79282/000095017025105218/xslF345X05/ownership.xml

[longterminvestor]

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).  

Edited August 8, 2025 by longterminvestor

[dealraker]

9 hours ago, longterminvestor said:

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).  

Thanks.

[treasurehunt]

12 hours ago, longterminvestor said:

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).  

 

Thanks for the link to the podcast. I learnt a lot listening to it.

[dwy000]

@longterminvestor just curious what youre seeing out in the field right now.  A couple of the brokers have spoken about the market finally starting to soften but then you get Willis and others doing just fine and seeming to suggest things are still quite strong.  Is it company or industry or geographic specific or are you seeing a broader softening (in either price or terms)?  Thx for the insight. 

[longterminvestor]

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.  

Edited August 14, 2025 by longterminvestor

[dwy000]

18 minutes ago, longterminvestor said:

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 brokers 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.  

Thanks, that's awesome insight. 

 

If i can sum up - its all over the place.  Theres softening in some areas, hardening in others and then there's property inflation underneath all that plus carriers with varying objectives (price vs cash flow). 

 

The podcast you highlighted was pretty interesting when talking about insuring cyber and he suggested they were struggling to price it properly so its interesting that you mention softness in that market.  

 

Thanks for the insights. 

[longterminvestor]

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.  

[dwy000]

12 hours ago, longterminvestor said:

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.  

Why has Amwins been able to double market share (at the expense of B&B) while everyone else seems pretty stable?

[Spekulatius]

$BRO long thesis in VIC just popped up for the 90 day peons:

https://valueinvestorsclub.com/idea/BROWN_andamp%3B_BROWN_INC/6885860910
 

Nothing new here but I agree it’s reasonably valued.

[longterminvestor]

On 8/19/2025 at 2:18 PM, dwy000 said:

Why has Amwins been able to double market share (at the expense of B&B) while everyone else seems pretty stable?

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.  

[gfp]

Patrick Ryan bought another $14m worth of RYAN specialty

https://www.sec.gov/Archives/edgar/data/1849253/000114503725000003/xslF345X03/wk-form4_1757938659.xml

 

Most insider buying windows close in a day or two (two weeks before end of quarter)

[dealraker]

1 hour ago, gfp said:

Patrick Ryan bought another $14m worth of RYAN specialty

https://www.sec.gov/Archives/edgar/data/1849253/000114503725000003/xslF345X03/wk-form4_1757938659.xml

 

Most insider buying windows close in a day or two (two weeks before end of quarter)

I wasn't aware of this but bought some RYAN today just a bit earlier.

[Spekulatius]

RYAN looks interesting but I don’t like the LP/ tax receivable structure.

 

Bought a few more $BRO shares instead today.

Edited September 15, 2025 by Spekulatius

[dwy000]

1 hour ago, Spekulatius said:

RYAN looks interesting but I don’t like the LP/ tax receivable structure.

 

Bought a few more $BRO shares instead today.

BRO (and Ryan) hitting 52 week lows. Might be time to double down soon.  BRO at half the multiple of AJG for similar quality. 

[dealraker]

1 hour ago, dwy000 said:

BRO (and Ryan) hitting 52 week lows. Might be time to double down soon.  BRO at half the multiple of AJG for similar quality. 

AJG at $290 will earn about $14 per share in 2026 and around $15.90 in 2027 is my best guess.

 

BRO at $92 will earn about $4.65 in 2026 and $5.10 in 2017 is also my wild ass guess.

 

They are actually priced almost identically in my view.  

[Spekulatius]

51 minutes ago, dealraker said:

AJG at $290 will earn about $14 per share in 2026 and around $15.90 in 2027 is my best guess.

 

BRO at $92 will earn about $4.65 in 2026 and $5.10 in 2017 is also my wild ass guess.

 

They are actually priced almost identically in my view.  

Yes $BRO and $AJG are similarly valued. Is stick with $BRO for now since I own some and don’t see an advantage buying $AJG over $BRO right now. $BRO is a bit depressed from the secondary to finance the equity portion of the aqusition.

[dwy000]

1 hour ago, dealraker said:

AJG at $290 will earn about $14 per share in 2026 and around $15.90 in 2027 is my best guess.

 

BRO at $92 will earn about $4.65 in 2026 and $5.10 in 2017 is also my wild ass guess.

 

They are actually priced almost identically in my view.  

My bad, I was referring to FCF multiples as opposed to earnings. AJG at 37 vs BRO at 24 (at least as a headline - i didn't dig into AJG for adjustments).  

[dealraker]

1 hour ago, dwy000 said:

My bad, I was referring to FCF multiples as opposed to earnings. AJG at 37 vs BRO at 24 (at least as a headline - i didn't dig into AJG for adjustments).  

Not a big deal, just want to clarify.  That FCF above is equally off too.  AJG free cash flow generally greatly exceeds earnings.

[dealraker]

Ramble here somewhat...

 

So I read the insurance broker analysts discourse from both Wells Fargo and Merrill Lynch as both in my view are are actually quite astute, particularly Wells where in my view years of "nailing it" has ensued.  Contrast that with some of the weakest understanding you can imagine, read Morningstar.  You might say, "Charlie, with your exprience...why would you do this?"  I do it because while I am constantly in and out of discussions of those in the business I am long out of the game and the age thing is also not an advantage point.

 

So I'd sold my decades long Progressive holdings at a good price to make sure I could participate at whatever level I wanted with a multi-family member commercial real estate venture.  Taxes payable sell, but for me the participation/relationship thing is reminiscent of why I post and participate here on COBF, the wife sums it up by saying, "Dear, please live in the present...old men taking past are not attractive and you know us younger types (Angela is younger than me) tend to...you know...walk the other way."

 

B of A or Merrill did this very long report on the brokers vs PGR, they've done a bunch lately, where they decided that hanging with Progressive would be somewhat better than hanging with the brokers, although staying with the brokers would yield quite fine outcomes.   In this report they basically said also, "Now that rates are weakening isn't it sure to come that a discussion of AI interruption something in their game will come to life?"  I pretty much thought this was a logical topic to discuss.

 

But to get to the point, Wells also had a very upbeat view - still - of Progressive.  But Wells has bailed on that positive (on price, they are fine with the business) PGR stock view, lowering their stock price view by about 20%.  The question I ask myself is simply "Do these analysts from both firms soon bail on the broker (stock prices) firms?  Do they lower their so-called "target" prices?

 

Again, you guys say, "What the hell Charlie, that's their bullshit of gotta do something at all times isn't it?"  In other words I'm sort of guessing we may get some really good prices on the brokers in the next year or so.  Of course this is if, and I do always wonder, if the businesses stay as robust as they now are.  Those good prices may be because the analysts do the waffle dance, that they lower their views.

 

The brokers are nothing but a grand operation perpetually undervalued because of their endless earnings gains.  I've been amazed that it hasn't been more successfully attacked!

 

Not proof reading this, just conversation.

 

Life is great...if you can stand it.

[EgonKuhn]

Maybe some parts of the story even align - a bit softer markets, a bit less volume, some AI scare - to feed a self-reinforcing bearish view on the whole broker sector. With some really good prices in effect. For me it's enough to hold my foot a little in the water.

[dealraker]

13 minutes ago, EgonKuhn said:

Maybe some parts of the story even align - a bit softer markets, a bit less volume, some AI scare - to feed a self-reinforcing bearish view on the whole broker sector. With some really good prices in effect. For me it's enough to hold my foot a little in the water.

I bought WTW again just under $300; AON in the $330 range;  RYAN at $51 or so; and BRO at $91-ish.  We will see, I'd expect to see those prices return a few times.  

 

I'd bought AJG for a family member's trust a couple years ago.  Paid $185 and was thinking, "That's too much."   The way of the world.   I've owned AJG, BRO, and MMC since 1994.  AON shortly thereafter and WTW for a few years now.  RYAN is a new one.