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

[hasilp89]

Ryan results out and look pretty good.

 

@dealraker apologies if you have already discussed above but curious on your thoughts for this business. I have a friend who used to work for BRP who turned me on to them and highlighted the $15M purchase by Pat Ryan as significant. (i did not realize he founded AON)

 

It seems the future prospects for they types of insurance they broker (wholesale specialty & E&S) and the potential for their MGA business (recent deals with nationwide and markel) are strong. As the world gets more complex specialty and non-admitted lines will become more prevalent and hard to underwrite - thus the need for specialized talent and MGA's. While retail brokerage is more sticky it doesn't seem as specialized and mostly relationship based (ie. i could start selling car insurance tomorrow) - on the other hand what Ryan/Amwins does is less sticky but more specialized and difficult for me to start doing tomorrow. 

 

I like their ability to quickly pivot into niches where prices are firming - this all because of their deep talent pool - that seems to result in a virtuous cycle - best talent wants to go work for them because they have the most opportunity in their niche - clients then flock to Ryan because they have the best underwriters for each risk.

 

I've been thinking more about the MGA business in general - historically ive always been skeptical - why would an insurer want to outsource what could be the most important thing for them - underwriting and pricing the risk. But then i think of parallels in other industries - whether endowments using PE or a hotel developer using 3rd party management - if someone else's expertise in a field is better and they are better able to manage the capital you let them do it (with guardrails) - so the whole MGA thing makes more sense to me now especially on the specialty side and given the increasing complexities of risks.

 

Bit of a ramble - in short its a question of - Is Ryan's business as good as the Retail brokers business? Are it's prospects actually better? Does it warrant the same multiple or a discount? curious on your thoughts.   

 

 

 

 

 

 

[Marco Van Basten]

1 hour ago, dealraker said:

OK, I see where you are.  So let me sling out something.  So things I own a lot of, and "a lot" means that at whatever percentage of my portfolio they dominate the portfolio.  

AJG

BRKA

Fairfax

Meta

Bro

Aon

Marsh McLennan

Pepsi

Coke

Mondelez

Hershey

Lowe's

Norfolk Southern

CSX

UNP

Canadian National

Canadian Pacific Kansas City

Intercontinental Exchange

CME Group

Nasdaq

Amrize

Martin Marietta

Vulcan

St. Joe

Republic Services

Waste Management

 

Right off hand that's my list and there's probably a couple not on there.  This would be 99% of my publicly traded stuff.

 

Charlie, with all due respect, I think that Pepsi, Mondelez and Hershey will be poor performers on a going forward basis.  Coca Cola at least has volume growth.

[Cod Liver Oil]

Bought some AJG. A bro in the industry said they are getting into more complex structures of risk sharing with insurers/captive/syndicates and hedge fund type investors which is high margin business.  Does this banker type stuff worry you @dealraker? 

[tnathan]

AJG is being priced to grow at 4% in perpetuity. The insurance market has grown at ~5% nominal over long time periods. A top insurance brokerage should grow at least that (plus additional for M&A, better fees as a % of policies placed). You're paying a very fair price (even favorable) for a great business here.

[dwy000]

1 minute ago, tnathan said:

AJG is being priced to grow at 4% in perpetuity. The insurance market has grown at ~5% nominal over long time periods. A top insurance brokerage should grow at least that (plus additional for M&A, better fees as a % of policies placed). You're paying a very fair price (even favorable) for a great business here.

That 4% is organic growth too.  Most of the top 5 have been very acquisitive which is where most of the growth has come from.  If they can buy out smaller competitors at lower multiples than theyre trading at - and for debt over equity, then youre winning at both. 

[buylowersellhigh]

5 minutes ago, dwy000 said:

That 4% is organic growth too.  Most of the top 5 have been very acquisitive which is where most of the growth has come from.  If they can buy out smaller competitors at lower multiples than theyre trading at - and for debt over equity, then youre winning at both. 

But isn't BRO at a cheaper valuation with more of a focus on middle market, which is a better spot to be at?  

[Hektor]

Thanks for the insight @tnathan @dwy000

[tnathan]

20 minutes ago, buylowersellhigh said:

But isn't BRO at a cheaper valuation with more of a focus on middle market, which is a better spot to be at?  

I own both now in size. The market is still highly fragmented and you can look at recent revenue growth as a floor. For reference see the attached PDFs from Houlihan Lokey who track the industry well
 

q2-2024-insurance-brokerage-market-update.pdf insurance-distribution-market-update-q1-25.pdf

[dealraker]

3 hours ago, Marco Van Basten said:

Charlie, with all due respect, I think that Pepsi, Mondelez and Hershey will be poor performers on a going forward basis.  Coca Cola at least has volume growth.

I have 100 times my inherited 1975 basis in KO and PEP.  Wanna pay my tax?

Edited October 31, 2025 by dealraker

[dealraker]

From listening to AJG management there is fear of rates diving which overall they are not seeing.  AJG apparently became aware of some seasonal revenue at Assured that reduced earnings.  My guess while the merger will be successful this isn't the last surprise in the basket.  Management sounded more positive than ever.  Down the road we go.

 

Insurance brokerage is a shockingly great business.

[Red Lion]

Finally started a position in this sector with a basket of RYAN, BRO, AJG. None of these are huge positions, but together they account for about 15% of my retirement account, I'm hoping to start learning more and opportunistically building these positions out over time. 

[dealraker]

Interestingly as to all brokers but in this case particularly AJG, and while I do not use Wells as my allocating tool (I am well over 50% insurance brokers for decades) of brokers their research has been dead right for 15 plus years...

 

They have what is by far the largest upside ever near term in their expectations of AJG's stock performance, over 50% from today's quote.   Just relaying what I read.  I'd don't think I've ever seen them with a figure over 30% and that's been 1 or 2 times in the last 15 years.

 

I think there is widespread fear of insurance rates of all types and sectors collapsing.   AJG management does not see that coming.  

Edited November 3, 2025 by dealraker
spellin'

[Spekulatius]

The brokers are still seeing organic growth . For at least BRO and AJG, the consumption of the large deals they did should mean that earnings are almost guaranteed to go up next year.

 

I also bought some AJG shares this morning. First time I own this stock. 
 

Edited November 3, 2025 by Spekulatius

[villainx]

Can someone elaborate on what RYAN's Tax Receivable Agreement and dual class share structure means?  I try to avoid messy corporate set up like that, but sounds like it's not uncommon in some of these companies.  Thanks.

[Marco Van Basten]

2 hours ago, Spekulatius said:

The brokers are still seeing organic growth . For at least BRO and AJG, the consumption of the large deals they did should mean that earnings are almost guaranteed to go up next year.

 

I also bought some AJG shares this morning. First time I own this stock. 
 

Be careful/ready for tax loss selling.  Could come in another ten percent easily because of that by mid-December.

[tnathan]

26 minutes ago, Marco Van Basten said:

Be careful/ready for tax loss selling.  Could come in another ten percent easily because of that by mid-December.

Can't wait ... if they drop another 10-20% the basket will be 20% of my portfolio

[Spekulatius]

1 hour ago, tnathan said:

Can't wait ... if they drop another 10-20% the basket will be 20% of my portfolio

I suspect it’s already happening but it can easily get worse. I don’t think institutional investor wait until mid December.

[villainx]

I thought mid December was the rally for the years favorite to show the good stocks the managers own. Doesn’t necessarily help the unloved, but that’s what the lore says. 
 

[dealraker]

14 hours ago, Marco Van Basten said:

Be careful/ready for tax loss selling.  Could come in another ten percent easily because of that by mid-December.

Yep.

[Marco Van Basten]

Michael Pesch, a VP, bought 4,000 shares yesterday at $245.853-$248.717.  Bringing his total holdings to 41,848 shares.  

[gfp]

31 minutes ago, Marco Van Basten said:

Michael Pesch, a VP, bought 4,000 shares yesterday at $245.853-$248.717.  Bringing his total holdings to 41,848 shares.  

 

For those wondering which security Marco Van Basten is referring to ->

https://www.sec.gov/Archives/edgar/data/2022545/000035419025000041/xslF345X03/form4.xml

[Valuebo]

How would you guys structure a basket of these companies? Equal weight, disregard valuation/management etc or get in the details a bit more? 

[tnathan]

goosehead seems interesting at these levels. It's definitely a play on housing recovering over the next few years, but does appear that they've built a better mousetrap vs. other personal lines distribution channels. Plenty of TAM for them to capture in a normalized housing market.

[Rainier]

Is there anything unique to the tax reporting on these? Especially BWIN and RYAN. Are they all just standard corporations with 1099 filings? I seem to remember one of them having a different corporate structure, but I may be misremembering that.

[dwy000]

3 minutes ago, Rainier said:

Is there anything unique to the tax reporting on these? Especially BWIN and RYAN. Are they all just standard corporations with 1099 filings? I seem to remember one of them having a different corporate structure, but I may be misremembering that.

The funky structure for BWIN is below the publicly traded entity.  The tax sharing and ownership reflects the partnership structure from previous IPO.  There wasnt anything impacting your share ownership as a normal share if I recall correctly