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

[Castanza]

22 minutes ago, LC said:

 

We call them dentist bikes

 

lmao 

 

What are you riding these days? 

[Eldad]

Funny because the main guy I know that spends the most on this type of stuff is in fact a dentist. I guess doctors don’t get fridays off so don’t make the leap as often haha. 

[LC]

@Castanza Norco carbon fluid - gotta show off the Canadian pride on the Colorado trails!

 

No e-bike assist yet...gotta use the legs while I still can! 

[dealraker]

Wells today:

 

AJG: estimates modestly higher on buyback. Our 2026 EPS estimate goes to 
$13.15(from $13.10) reflecting the Q1 beat and higher share repurchases, partially offset 
by lower acquired revenue. Our 2027 and 2028 EPS estimates go to $14.90 and $16.75 
(from $14.85 and $16.65) reflecting flow-through impact of higher share repurchases in 
2026 and 2027, partially offset by lower acquired revenue in 2026. Our price target goes 
to $271 (from $266) on ~18.1x 2027 EPS plus $2 for our clean coal DCF.
AON: modest changes to EPS estimates. Our 2026 EPS estimate is unchanged at 
$19.20. For 2027 our EPS estimate goes slightly higher to $21.55, while 2027 is 
unchanged at $23.70. Across all years we factor in slightly higher organic growth within 
Commercial Risk, slightly lower growth in the other three business lines, and slightly lower 
margins. 2026 also reflects the modest EPS shortfall in the quarter. Our price target goes 
to $409 (19x 2027 EPS) from $402.
WTW: estimates go lower mostly on weaker R&B results. For 2026 our EPS estimate
goes to $19.85 (from $20.15) on lower organic growth, predominately from Career and 
CRB and lower margin in R&B. Our 2027 and 2028 EPS estimates are now $22.80 and 
$25.15 (from $23.30 and $25.75) reflecting flow-through impact from the lower organic 
growth in 2026, lower organic growth estimates during both years, and lower margins.
Our price target goes to $319 (from $351) based on 14.0x our 2027 EPS estimate.

[MikeL]

@dealraker would you mind post BRO and Ryan estimates from Wells, much appreciated it!

[dealraker]

23 minutes ago, MikeL said:

@dealraker would you mind post BRO and Ryan estimates from Wells, much appreciated it!

 

Wells was not nearly as positive on BRO pre-fall in price as most of the analysts.  But still they've gradually lowered and lowered again their view.   I think BRO is a good place to invest today like many here on COBF.

 

EPS estimates and price target go down: Our 2026, 2027, and 2028 EPS estimates 
go down to $4.45, $4.70, and $5.20 (from $4.50, $4.80 and $5.30), reflecting lower 
organic growth partially offset by higher contingent commissions. We assume $50m of 
lost revenue related to Howden (vs $31m provided by co and $75m prior). PT goes to 
$69 (from $72) using a 14.6x multiple of our 2027 EPS which uses a linear regression of 
historical organic growth and valuation levels and applying a slight AI discount.
Organic expectations lowered: Retail organic growth should see modest improvement 
in each quarter of the year vs Q1 with an upper bound of 2.5%. Retail is being negatively 
impacted by 50-100 bps over next couple of quarters from change in revenue model for 
specialty pharmaceutical business. Specialty distribution organic is expected to be flat in 
Q2 due to heavy weighting to property cat and should improve in H2 as they place less 
property cat business and have the 180 business from Accession.
Guidance away from organic included: (1) contingents are expected to be up this 
year (prior guidance was for specialty distribution contingents to be down $15m), (2)
Accession synergies expected to be $30-40m in 2026 (unchanged), and (3) they did not 
provide an updated margin guide for the FY, as estimates should flow though the change 
in organic and contingent guidance (prior guide was for underlying business to see flat 
margins while lower investment income was headwind to margin).
What else: Property pricing continues to get worse, with property cat E&S rates down 
15-35% in Q1 (vs down 15-30% in the Q4) with some changes at the end of the quarter 
outside of this range. BRO also seems to be leaning into repurchases vs M&A. On Howden 
they now expect revenue lost from the departures to be $31m, up from prior $23m, and 
$10m they saw in Q1. Of the remaining lost revenue to Howden they expect it to come 
on evenly during the year.

[dealraker]

33 minutes ago, MikeL said:

@dealraker would you mind post BRO and Ryan estimates from Wells, much appreciated it!

RYAN is also where Wells too wasn't as upbeat as most...but still they've lowered their view a couple of times.  

 

Estimates and price target go lower: We revise down our EPS estimates to $2.00, $2.20 
and $2.50 (from $2.20, $2.50, and $2.90) reflecting this lower organic growth and margin 
view. Given that organic growth is now expected to be below the retail insurance brokers 
(at MSD vs some of the strongest growing retail brokers at MSD+) we now use a below 
peer multiple for our price target (13.9x 2027 EPS and 10.7x EBITDA) translating into a 
price target of $31 (from prior $42).
The good: The quarter itself was good with EPS, organic and margin beating expectations.
Q1 organic revenue of 11.8% was above our 10%, while EBITDAC margin was 29.2% 
beating our 27.1%. The company saw good growth from the Nationwide/Markel renewal 
rights deal. From a capital perspective, RYAN is leaning into buyback and bought $40m in 
Q1 and pointed to additional M&A not coming until later this year / 2027. Ryan is taking 
share in the E&S market but this is being offset by price declines.
The bad: Pricing headwinds in the E&S market are more than offsetting the flow to the 
market. RYAN said they still see 8%+ of new business coming into the E&S market, which 
RYAN is benefiting from, but this is being more than offset by pricing headwinds, which is 
lowering their organic growth to MSD. The MSD would put them in-line with (to-slightlybelow) the retail brokers whereas they had been targeting 1.5-2x the growth of the retail 
brokers.
The ugly: Organic and margin guidance revised down for second straight quarter 
with RYAN more cautious on property given rate declines persisting in 25-35% range, 
resulting in a meaningful decline in property business for FY. They are also assuming more 
moderate growth in casualty. For Q2 they expect flat organic with FY at MSD (4-6%)
 

Edited May 4 by dealraker

[MikeL]

Thank you very much!

[tnathan]

Any thoughts on ARX as a short? This was an interesting read https://theglobalmosaic.substack.com/p/accelerant-follow-the-money-not-the

[Eldad]

When is the last time you calculated a Graham number? When was the last time a company you wanted to own had one under the required 22.5? 
 

BRO coming in with a smooth 20.3 (using fcf) right now. 
 

I feel like we are not making a big enough deal out of this. The good old days are here right now! I think I’m going to have to make a much bigger move on this. 

[Spekulatius]

Great deal for $RYAN shareholders.

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001849253/000184925326000023/ryan-20260430.htm

 

$RYAN will to $52.3M in shares for the closing price from 5/4/2026 ($29.66) to reward employees stock with stock until 2036.

Edited May 9 by Spekulatius

[HJ]

I know people have posted videos from Sica Fletcher before.  I found the ones done by Mike Fletcher quite insightful.  Below are 2 on Brown & Brown.  These discussions are very much from the perspectives of PE sponsors.  I can't help but speculate whether the selling pressure on the public brokers generally are coming from the PE's trying to hedge their own insurance broker holdings with the IPO windows shut.  Public brokers are not good hedges for their own companies, and I don't know if any PE's actually operate that way.  In the case of BRO specifically, I can see Kelso hedging the deferred stock component of the purchase price.  But the draw down on AJG and RYAN are also quite dramatic.  

 

 

Edited May 9 by HJ

[Castanza]

6 hours ago, HJ said:

I know people have posted videos from Sica Fletcher before.  I found the ones done by Mike Fletcher quite insightful.  Below are 2 on Brown & Brown.  These discussions are very much from the perspectives of PE sponsors.  I can't help but speculate whether the selling pressure on the public brokers generally are coming from the PE's trying to hedge their own insurance broker holdings with the IPO windows shut.  Public brokers are not good hedges for their own companies, and I don't know if any PE's actually operate that way.  In the case of BRO specifically, I can see Kelso hedging the deferred stock component of the purchase price.  But the draw down on AJG and RYAN are also quite dramatic.  

 

 

Have not seen either of these. Thanks for sharing 

[longterminvestor]

On 5/8/2026 at 6:16 PM, Eldad said:

When is the last time you calculated a Graham number? When was the last time a company you wanted to own had one under the required 22.5? 
 

BRO coming in with a smooth 20.3 (using fcf) right now. 
 

I feel like we are not making a big enough deal out of this. The good old days are here right now! I think I’m going to have to make a much bigger move on this. 

Believe "Graham Number" uses P/B in the calculation.  My opinion, P/B has no bearing on insurance brokers because 65%+ of assets on balance sheet are Goodwill and Amortizable intangibles.  The rest is cash, some of the cash is theirs and most of it belongs to their carrier partners or customers.  

 

Not trying to take away from the buying opportunity.  Admittedly, I was early on the call to arms.  I have bought at $96, $93, $78, $69, and $59.  Obviously not very price sensitive.  At first just saw, oh great I can own it, then as the price fell, in Mr. Buffett's words, the dog has "caught the car". I hope to buy more as cash becomes available, its a business I like and understand.  

 

As a student of insurance brokers and BRO specifically, its a business I know well and am confident in management.  These are the tough times to hold any business, when the price is down significantly.  Hard to predict market would hate on BRO so much.  I was not buying early on any metrics or ratios.  I just want to own BRO for a long long time (already owned and sold at a different time).  I am pleased to have Mr. Market selling it in to me and others.  

 

Any buybacks at this point are very accretive considering Accession/RS was purchased using $5B+ on stock roughly at $100/share.  Total consideration was $9.8B for $1.7B of revenue - call it 5.7X revenue.  There's some hocus-pocus metrics math on what BRO actually paid using EBITDA or EV/EBITDA or multiple of EBITDA(easiest measure is the crudest - price / revenue).  Remember, the 5.7X revenues was paid using stock valued at $100 to purchase roughly 50% of Accession/RS.  If you take the current run rate pre-acquisition of call it $5.5B + $1.7B of Accession/RS you have $7B.  That means the business is currently trading at 2.7X revenues ($18.78B Market cap).  Buybacks are great uses of capital today (and paying down debt) so if you paid 5.7X using stock that trades at 2.7X, seems like an opportunity AS LONG AS everyone stays.  

 

When your stock is overvalued, use as currency.  When its undervalued, buy it back.  

 

RISKS: BRO management has had to "re-tool" to manage the size of growing organization.  One of my risks I see is management has not done enough work on "BRO culture works for 10K employees, can it work on 25K+?".  There has been some cultural drift away from decentralization and more centralization which is gonna happen with a larger org.  One of the things that always made/makes BRO special is the lack of "lets check with headquarters on this".  

[Eldad]

21 hours ago, longterminvestor said:

Believe "Graham Number" uses P/B in the calculation.  My opinion, P/B has no bearing on insurance brokers because 65%+ of assets on balance sheet are Goodwill and Amortizable intangibles.  The rest is cash, some of the cash is theirs and most of it belongs to their carrier partners or customers.  

 

Not trying to take away from the buying opportunity.  Admittedly, I was early on the call to arms.  I have bought at $96, $93, $78, $69, and $59.  Obviously not very price sensitive.  At first just saw, oh great I can own it, then as the price fell, in Mr. Buffett's words, the dog has "caught the car". I hope to buy more as cash becomes available, its a business I like and understand.  

 

As a student of insurance brokers and BRO specifically, its a business I know well and am confident in management.  These are the tough times to hold any business, when the price is down significantly.  Hard to predict market would hate on BRO so much.  I was not buying early on any metrics or ratios.  I just want to own BRO for a long long time (already owned and sold at a different time).  I am pleased to have Mr. Market selling it in to me and others.  

 

Any buybacks at this point are very accretive considering Accession/RS was purchased using $5B+ on stock roughly at $100/share.  Total consideration was $9.8B for $1.7B of revenue - call it 5.7X revenue.  There's some hocus-pocus metrics math on what BRO actually paid using EBITDA or EV/EBITDA or multiple of EBITDA(easiest measure is the crudest - price / revenue).  Remember, the 5.7X revenues was paid using stock valued at $100 to purchase roughly 50% of Accession/RS.  If you take the current run rate pre-acquisition of call it $5.5B + $1.7B of Accession/RS you have $7B.  That means the business is currently trading at 2.7X revenues ($18.78B Market cap).  Buybacks are great uses of capital today (and paying down debt) so if you paid 5.7X using stock that trades at 2.7X, seems like an opportunity AS LONG AS everyone stays.  

 

When your stock is overvalued, use as currency.  When its undervalued, buy it back.  

 

RISKS: BRO management has had to "re-tool" to manage the size of growing organization.  One of my risks I see is management has not done enough work on "BRO culture works for 10K employees, can it work on 25K+?".  There has been some cultural drift away from decentralization and more centralization which is gonna happen with a larger org.  One of the things that always made/makes BRO special is the lack of "lets check with headquarters on this".  

Yeah PE times P/B less than 22.5. It was kind of a joke, but even still a great company like BRO just passed a 1940/50s value screen in 2026 with the market in a crazy mania. What a crazy world we live in. 

[HJ]

On 5/12/2026 at 12:22 AM, longterminvestor said:

RISKS: BRO management has had to "re-tool" to manage the size of growing organization.  One of my risks I see is management has not done enough work on "BRO culture works for 10K employees, can it work on 25K+?".  There has been some cultural drift away from decentralization and more centralization which is gonna happen with a larger org.  One of the things that always made/makes BRO special is the lack of "lets check with headquarters on this".  

Hear hear.  As I think about what these companies and their operating environment looked like last time they traded at this valuation, the difference is the size of the organization and presence of PE as competitors.  The Howden raid happens to represent double impact.  Only time will tell how this management team answers the call.  The Greenberg's are both known to be micro managers, but their empires are both risk bearing entities with pre-crisis AIG proven to be unmanageable.  Insurance brokers are non-risk bearing entities.  But managing producers with options to work elsewhere and a broken stock price certainly presents a different set of challenge. 

 

The flip side is all competitor's are rollups faced with the same set of issues and PE backing has its pro's and con's.  It's an interesting mental exercise to pontificate on what BRO looks like relative to the insurance brokerage industry on the other side of the soft cycle.  

[benchmark]

On 5/11/2026 at 9:22 PM, longterminvestor said:

Believe "Graham Number" uses P/B in the calculation.  My opinion, P/B has no bearing on insurance brokers because 65%+ of assets on balance sheet are Goodwill and Amortizable intangibles.  The rest is cash, some of the cash is theirs and most of it belongs to their carrier partners or customers.  

 

Not trying to take away from the buying opportunity.  Admittedly, I was early on the call to arms.  I have bought at $96, $93, $78, $69, and $59.  Obviously not very price sensitive.  At first just saw, oh great I can own it, then as the price fell, in Mr. Buffett's words, the dog has "caught the car". I hope to buy more as cash becomes available, its a business I like and understand.  

 

As a student of insurance brokers and BRO specifically, its a business I know well and am confident in management.  These are the tough times to hold any business, when the price is down significantly.  Hard to predict market would hate on BRO so much.  I was not buying early on any metrics or ratios.  I just want to own BRO for a long long time (already owned and sold at a different time).  I am pleased to have Mr. Market selling it in to me and others.  

 

Any buybacks at this point are very accretive considering Accession/RS was purchased using $5B+ on stock roughly at $100/share.  Total consideration was $9.8B for $1.7B of revenue - call it 5.7X revenue.  There's some hocus-pocus metrics math on what BRO actually paid using EBITDA or EV/EBITDA or multiple of EBITDA(easiest measure is the crudest - price / revenue).  Remember, the 5.7X revenues was paid using stock valued at $100 to purchase roughly 50% of Accession/RS.  If you take the current run rate pre-acquisition of call it $5.5B + $1.7B of Accession/RS you have $7B.  That means the business is currently trading at 2.7X revenues ($18.78B Market cap).  Buybacks are great uses of capital today (and paying down debt) so if you paid 5.7X using stock that trades at 2.7X, seems like an opportunity AS LONG AS everyone stays.  

 

When your stock is overvalued, use as currency.  When its undervalued, buy it back.  

 

RISKS: BRO management has had to "re-tool" to manage the size of growing organization.  One of my risks I see is management has not done enough work on "BRO culture works for 10K employees, can it work on 25K+?".  There has been some cultural drift away from decentralization and more centralization which is gonna happen with a larger org.  One of the things that always made/makes BRO special is the lack of "lets check with headquarters on this".  

Given the 'softness' of the insurance market, isn't AJG better positioned than BRO? AJG has also dropped significantly. 

[longterminvestor]

On 5/15/2026 at 1:25 AM, benchmark said:

Given the 'softness' of the insurance market, isn't AJG better positioned than BRO? AJG has also dropped significantly. 

Looking at Price to Cash Flow, BRO (13Xish) is cheaper than AJG (20X ish).  WTW is cheapest on Price/Cash Flow however just seems like WTW is a wounded bird.  Dont know the WTW business that well to comment but there was a large write off that scared me (WTW got smoked on a deal).  

 

I also like the fact that BRO is growing from a smaller base.  But thats a personal thing.  Big can get bigger, but there is more room for small to get big/bigger.  

Edited May 20 by longterminvestor

[thowed]

Thought you might all find this interesting : feature on brokers by a well-regarded Insurance Mutual Fund here in the UK.  It's their 25th anniversary, so they've done OK.

 

https://www.polarcapital.co.uk/gb/professional/Investment-Insights/Post/18319/AI_and_the_insurance_broker_disintermediation_debate/

 

Separately, I find it interesting how little insider buying there has been at AJG and BRO.  Though I like that a long-term BRO director bought some recently.