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

tnathan

By tnathan
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dealraker Veteran

dealraker

Posted
Posted (edited)
25 minutes ago, dwy000 said:

Why do short sellers seem to believe that the longer their report the more valid their argument.  

 

Haven't read it yet but given the stock was well over $50 at the time and its now $23, either they had some valid views or they got really lucky. 

LOL I've bought a small amount of Baldwin at both $27-28 and at a tad below $24.  Might get Interesting, I never just dismiss a report like this one.  I've written them myself.

Edited by dealraker
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longterminvestor
longterminvestor

WR Berkley Q4 Call.pdf   Take a look at excerpt from WR Berkely's Q4 transcript.  Company President Mr. Berkley's comments regarding the relationship between the "manufacturer" (insurance co

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dwy000 Grand Master

dwy000

Posted
Posted
2 hours ago, dealraker said:

LOL I've bought a small amount of Baldwin at both $27-28 and at a tad below $24.  Might get Interesting, I never just dismiss a report like this one.  I've written them myself.

Having read thru it now I will say that the short seller wasnt wrong in their concerns.  They might have played up the significance of it to the overall business but their points were legit. How much of that led to the price coming down 50% vs the fact that it was just ridiculously overvalued at the time is an open question. 

 

The real test will come out over the next few quarters as the contingent payouts have now largely been worked through.  So we will see how much margins are impacted if in fact they were burying commissions in contingent payouts.  The cash flows should now be much closer to EBITDA without the huge adjustments.  If they make a large acquisition I would run away because its likely being used to hide the cash flow issues. 

Spekulatius Grand Master

Spekulatius

Posted
Posted (edited)

Re BWIN (used to be BRP) the concerns that Blue Orcs brings up are more or less mentioned in this thread on the first few pages. You can see from a mile away just looking at BWIN income statement and balance sheet that they a very aggressive rollup. Sith that come questions about rollup costs, adjustments to the income statement and the balance sheet (leverage). It looks like a hot potato stock to me.

Edited by Spekulatius
RichardGibbons Rising Star

RichardGibbons

Posted
Posted
8 hours ago, dwy000 said:

Why do short sellers seem to believe that the longer their report the more valid their argument.  

 

It's a proven strategy that works with written sales offers. With respect to short sales arguments, think there's two purposes.

 

The first is that a significant number of people will read as far as necessary to become convinced. The second is that a significant number of people will say, "I don't have time to read that, but it's clear that there's a lot there. So I certainly won't buy that company."

dealraker Veteran

dealraker

Posted
Posted (edited)
6 hours ago, RichardGibbons said:

 

It's a proven strategy that works with written sales offers. With respect to short sales arguments, think there's two purposes.

 

The first is that a significant number of people will read as far as necessary to become convinced. The second is that a significant number of people will say, "I don't have time to read that, but it's clear that there's a lot there. So I certainly won't buy that company."

For years there were reports similar to this as to AJG and their clean coal investments.  Like this report on BWIN I did not do a mental shortcut and dismiss those analysts.  Before I could determine their right or wrong on AJF the earnings would go substantially up.

 

I've aged such that I am more likely to trust others thoughts and findings here on COBF, that is rather than my own thinking.

Edited by dealraker
dealraker Veteran

dealraker

Posted
Posted

Interesting news continues, this with BRO:

 

What happened: This morning, in a bit of a surprising announcement BRO announced that Steve Hearn (its COO) would be taking over as President of Retail and that Barrett Brown (brother of the CEO Powell Brown and son of its Chairman Hyatt Brown) was taking a personal leave of absence (effective 10/17). Given how close this is to earnings, combined with the disappointing retail results over the past 12 months we view this as a negative data point.

dwy000 Grand Master

dwy000

Posted
Posted
14 minutes ago, dealraker said:

Interesting news continues, this with BRO:

 

What happened: This morning, in a bit of a surprising announcement BRO announced that Steve Hearn (its COO) would be taking over as President of Retail and that Barrett Brown (brother of the CEO Powell Brown and son of its Chairman Hyatt Brown) was taking a personal leave of absence (effective 10/17). Given how close this is to earnings, combined with the disappointing retail results over the past 12 months we view this as a negative data point.

Thats pretty meaningful.  A "personal leave of absence" is corporate-speak for "why dont you sit this one out for a while bro?  We will keep paying you but let's get someone to clean up the mess and then we will figure out what to do with you."

Spekulatius Grand Master

Spekulatius

Posted
Posted
7 hours ago, dwy000 said:

Thats pretty meaningful.  A "personal leave of absence" is corporate-speak for "why dont you sit this one out for a while bro?  We will keep paying you but let's get someone to clean up the mess and then we will figure out what to do with you."

Barrett Brown is just a VP though. If CEO or CFO‘s leave, then it’s a bigger deal, but VP‘s not so much.

dwy000 Grand Master

dwy000

Posted
Posted
6 minutes ago, buylowersellhigh said:

In press release it mentions he was President of Retail.

They did change the entire leadership of retail 2 weeks ago so maybe this was the plan all along?  Steve Hearn is relocating from London for it so this is not just a temporary fix. 

Eldad Mentor

Eldad

Posted
Posted (edited)

I’m getting like a 6.75x EBITDA multiple for what BRO pays for acquisitions. Is that close to what you longterm holders have observed?
 

It looks like that matches what I can find on industry standards. 

Edited by Eldad
dwy000 Grand Master

dwy000

Posted
Posted
1 hour ago, Eldad said:

I’m getting like a 6.75x EBITDA multiple for what BRO pays for acquisitions. Is that close to what you longterm holders have observed?
 

It looks like that matches what I can find on industry standards. 

Don't forget to account for acquisition related earn out payments that ultimately flow thru the financing section of the cash flow statement as opposed to earnings. 

Spekulatius Grand Master

Spekulatius

Posted
Posted
On 10/23/2025 at 12:44 PM, Eldad said:

I’m getting like a 6.75x EBITDA multiple for what BRO pays for acquisitions. Is that close to what you longterm holders have observed?
 

It looks like that matches what I can find on industry standards. 

They are paying more than that right now. AJG mentioned 10-11x EBITDA a few years ago but that was for small acquisitions. BRO paid way more than that for Ascension (their recent large acquisition). My guess is that acquisitions are done at  the low teens multiple right now.

Spekulatius Grand Master

Spekulatius

Posted
Posted (edited)

BRO will announce earnings today after the close , which should be interesting.

The key metrics  will be organic growth and the integration of the of the Accession acquisition , imo.

 

AON also has a weak day today . I like this stock also.

Edited by Spekulatius
dwy000 Grand Master

dwy000

Posted
Posted
1 hour ago, Spekulatius said:

Looks like a beat to me. Organic revenue growth has remained at ~3.5% - the same than last quarter. I take it as good news that organic growth has not slowed down more.

It was a nice boring report.  Given the personnel stuff recently and announcing a buyback literally months after issuing $4bn of shares, I was bracing for bad news. Its obvious they have a lot of work to integrate the acquisition but it certainly doesnt appear to have harmed the organic business. 

Spekulatius Grand Master

Spekulatius

Posted
Posted
2 hours ago, Castanza said:

Take what the market gives you...

I certainly do, but I wonder what caused the selloff to begin with. The headline numbers looked Ok. The CC transcript seems Ok too but management commentary is not very promotional. The Accession acquisition seems to go alright. It does look like the report caused the sector to turn south.

 

Anyways, I bought more BRO and also a bit more AON today.

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