Brown & Brown Inc (BRO) — Q2 2025 Earnings Call Transcript

Thanks, Deedee. Good morning, everyone, and welcome to our second-quarter earnings call. Before we get into the results for the quarter, we wanted to provide an update on the acquisition of RSC Topco, or as we refer to it, Accession. Post the announcement, John Mina, myself and a number of other senior leaders met with many of the teammates from Accession, and the feedback has been positive. We're very excited about our expanded capabilities and how we can leverage them for the benefit of our customers. From a regulatory standpoint, we have substantially all approvals and anticipate an 8/1 close. From a financing standpoint, we completed a very successful follow-on equity issuance and a multi-tranche bond issuance that were both significantly oversubscribed. The teams have been working on our integration plans, and efforts are well underway to bring our two great companies together. Now let's transition to the results. I'll provide some high-level comments regarding our performance, along with updates on the insurance market and the M&A landscape. Then Andy will discuss our financial performance in more detail. Lastly, I'll wrap up with some closing thoughts before we open it up for Q&A. I'm on Slide #4. For the second quarter, we delivered $1.3 billion of revenue, growing 9.1% in total and 3.6% organically as compared to the same period in the prior year. Our adjusted EBITDAC margin improved by 100 basis points to 36.7%, and our adjusted earnings per share grew over 10% to $1.03. On the M&A front, we completed 15 acquisitions with estimated annual revenues of $22 million. I'm on Slide 5. At a macroeconomic level, things have not changed substantially. Customer outlook and confidence seem to be fairly similar to the first quarter. Generally, customers are cautiously optimistic that the uncertainties of tariffs and other matters will resolve in a favorable manner. We continue to see many customers investing in their businesses, while some customers are delaying investment decisions until they have a better view on the growth trajectory. With continued economic and job expansion, we think some customers will be able to delay their investment decisions for only so long. Overall, we believe the economy is still in a good place. From an insurance pricing standpoint, rates for most lines moderated even further in the second quarter and in some cases, more than we expected. The outliers were auto, casualty and cat property. We're now seeing classic market softening signs for certain lines of business, where carriers can have a material difference in quoted rates for renewal business versus new business on similar insured assets. Pricing for U.S. employee benefits was similar to prior quarters as medical costs are up 6% to 8%, and pharmacy costs are generally up over 10%. We do not expect this trend to slow over the coming quarters, which will continue to drive demand for our consulting businesses. Rates in the admitted P&C market continue to moderate down. While rates were up 1% to 5% versus the prior year. This is in comparison to rate increases of 2% to 7% in the first quarter of '25 and rate increases of 5% to 10% in the second quarter of last year. The downward trend on workers' compensation rates remained in most states and were flat to down 5%. For non-cat property, we're seeing a general softening of rates, which were down 5% to up 5%. It totally depends on the loss experience. For casualty, we're seeing rate increases of 5% to 10% for primary and excess layers and believe this trend will continue over the coming quarters. For Professional Liability, rates were down 5% to up 5% as compared to last year. Shifting to the E&S property market. In the first quarter, rates were generally down 10% to 20%. The trend continued throughout the second quarter with rates down 15% to 30%. We saw more pressure on rates at the end of the quarter. Consistent with previous quarters and the softening cycle, there continue to be exceptions to the ranges. With the decline in admitted rates, customers are more often pocketing the savings, while we saw certain non-admitted customers consider higher limits or deductible buydowns, which partially offset the premium decline related to the changes in rates. On an M&A front, we had another good quarter. On a year-to-date basis, we've acquired 29 companies with annual revenues of approximately $60 million. I'm on Slide 6. Let's transition to the performance of our three segments for the quarter. Retail delivered organic growth of 3% with the results impacted by slowing admitted and cat property rates and lower new business. Regarding new business, we continue to have a good pipeline and can have fluctuations by quarter. Programs delivered 4.6% organic growth for the quarter. We had several programs that performed well, including our lender-placed business. Our organic growth was impacted by the slowing of our commercial cat programs. We saw increased downward pressure on rates late in the quarter. Brokerage delivered organic revenue growth of 3.9%. This performance was driven by growth across most lines of business, with the growth partially offset by rate declines and the seasonality of property renewals. From an open brokerage standpoint, we had a good quarter even with the decline in property rates. For both binding and personal lines, we're seeing increased competition from other markets. Professional Liability rates continued to decline during the quarter for D&O and EPL. Now I'll turn it over to Andy to get into more details regarding our financial results.

Thank you, Powell. Good morning, everyone. Before we get into the financial details, we wanted to share and talk about the impact on our earnings related to the acquisition of Accession and our related debt and equity issuances in June. As discussed during our call announcing the acquisition, transaction and integration costs related to our pending acquisition of Accession will be excluded from our calculation of adjusted EBITDAC and adjusted earnings per share, which for this quarter included approximately $37 million of one-time transaction and integration-related costs. In addition, with the debt issuance, we recorded approximately $13 million of incremental interest income for the quarter, and we recorded incremental interest expense of approximately $5 million. The shares issued as a result of our equity offering increased our weighted average share count by approximately 8.5 million for the quarter. Transitioning now to our consolidated results for the quarter. As a reminder, when we refer to EBITDAC, EBITDAC margin, income before income taxes or diluted net income per share, we are referring to those measures on an adjusted basis. The reconciliations of our GAAP to non-GAAP financial measures can be found either in the appendix of this presentation or the press release we issued yesterday. On a consolidated basis, we delivered total revenues of $1.285 billion, growing 9.1% as compared to the second quarter of 2024. Income before income taxes increased by 13.6%, and EBITDAC grew by 12.1%. Our EBITDAC margin was 36.7%, expanding by 100 basis points over the second quarter of the prior year, driven by incremental interest income and underlying margin expansion. For the quarter, our margin expansion was partially offset by the seasonality of revenue and profit associated with some recent acquisitions. Our effective tax rate for the quarter decreased slightly to 24.7% versus 25.3% in the second quarter of the prior year. Diluted net income per share increased 10.8% to $1.03. Our weighted average shares outstanding increased by approximately 10 million, primarily due to the share issuance we mentioned earlier. Lastly, our dividends paid per share increased 15.4% compared to the second quarter of 2024. Overall, we are pleased with our performance and how our team delivered for the quarter. We're on Slide #8. The Retail segment grew total revenues by 7.9% with organic growth of 3%. The difference between total revenues and organic revenue was driven substantially by acquisition activity over the past year. Our EBITDAC margin decreased by 50 basis points to 27.5% due to the impact of revenue seasonality for Quintes, which we acquired in the fourth quarter of 2024. As we discussed previously, approximately 60% of the revenues for Quintes are recognized in the first quarter. Therefore, we have higher margins in the first quarter and lower margins in the others. We will see similar impacts in the third and fourth quarters of this year. We're over on Slide #9. Programs delivered organic growth of 4.6%. Total revenues increased 6.1%, driven by higher contingent commissions. Our EBITDAC margin expanded by 320 basis points to 52.8%, primarily driven by organic revenue growth, incremental contingent commissions and managing our expenses. We're on Slide #10. Our Wholesale Brokerage segment had another good quarter with total revenues increasing 14.5% and organic growth of 3.9%. The incremental expansion in total revenues in excess of organic was driven by acquisitions completed in the last 12 months and higher contingent commissions. Our EBITDAC margin increased by 80 basis points to 34.1%, primarily due to higher contingent commissions. Our margin was impacted due to a recent acquisition that has a lower margin than the average for the total business. As we've done in the past, we expect to increase the margin for this business over time. As a reminder, starting in the third quarter, we will be combining our programs and wholesale segments into one division, which will be called Specialty Distribution. A few other comments. From a cash perspective, we generated $537 million of cash flow from operations, which was an increase of $164 million over the first half of 2024. In addition, in connection with our pending acquisition of the Accession, we successfully issued $4.4 billion of equity and $4.2 billion of debt. Both offerings were significantly oversubscribed, demonstrating the support for Brown & Brown. The discount on the equity was just over 3%, and the average coupon on our debt was 5.4%. Lastly, we also paid the outstanding balance of $400 million on our revolving credit facility during the quarter. Our balance sheet is in great shape, and we have strong cash flows to support delevering post-closing, which is consistent with our historical approach after a larger deployment of capital. With that, let me turn it back over to Powell for closing comments.

Thanks, Andy, and a great summary of our results. From an economic standpoint, we believe the main areas of focus will be tariffs and interest rates. As we mentioned earlier, we think there's still a good backdrop for economic expansion, hiring remains solid, and most companies are growing. This is even while leaders have a cautious bias and some are delaying investment decisions. From a pricing standpoint, we expect admitted rates to continue to moderate in the second half of the year at a rate similar to the second quarter. Cat property rates should continue to decrease in the third and fourth quarter, subject to the outcome of hurricane season. We expect rate changes for Casualty and Professional Liability in the second half of the year to be similar to the second quarter. On the M&A front, we're diligently working on our integration plans for the acquisition of Accession and have teams from both organizations focused on bringing us together. As we mentioned in our announcement call, we plan to remain active in the M&A space and have a good combined pipeline, both domestically and internationally. Our balance sheet remains strong, and we have outstanding cash flow conversion to help fuel our growth. We're focused on deploying our capital in a very disciplined manner to ensure we get a compounding effect over many years. We're in a great position as a company and are very pleased with our strong results for the first half of 2025. Our team delivered double-digit growth in total revenue and adjusted diluted net income per share, expanded our margins, and we grew our cash flow from operations approximately 44%. With the planned closing of the Accession acquisition in August, our team is going to grow to over 23,000 outstanding teammates, and we will further increase our diversification and specializations, which will enhance our ability to deliver creative solutions for our customers. We're looking forward to a successful second half of the year and continued profitability to grow our company profitably. With that, I'll turn it over to Deedee to open it up for questions.

When you think about the Retail organic in the quarter, you had talked last quarter about maybe some timing of new business. In this quarter, you talked about a strong pipeline, but likewise with some fluctuations on a quarterly basis. Could you expand on that? What fluctuations there might have been? How is that shaping up for 3Q?

Sure. So based on the consensus of what we were going to grow in Q2 in Retail versus what we delivered, over half that discrepancy was because of rates, so downward pressure on rates. The other half is we basically just had lower new business in the quarter. And so sometimes that can happen. And as I said, I feel that we have good new business going into the third quarter, but every quarter is a little different, and our visibility into it seems to indicate that we are in good shape for Q3. But I just want to make sure that everybody understood that more than half the discrepancy was because of rate pressure.

Yes, I just wanted to ask on the contingents, some strong growth in the contingent commissions there. Just curious, is there a theme? Or is that more driven by certain products?

Rob, I think there are a couple of themes to consider. Overall profitability for many carriers is up, and several of our programs are performing quite well, which means we're sharing in the profits that support those programs. It's important to remember that as organic growth sometimes slows down, there's usually a corresponding increase in contingent commissions. This is why we emphasize cash growth and examine total revenue, as they are interconnected. Overall, we are very satisfied with our performance regarding contingent commissions. In the Program space, we take pride in our disciplined underwriting approach, ensuring we deliver excellent results for our carrier partners.

I want to ask about Accession, the strategies, and 180. Since you've had more time to analyze the business, I'm curious about your thoughts on the financials. You mentioned previously about integration expenses and revenue and expense synergies. Do you have any insight on when those costs and synergies might be realized in the next couple of years? Additionally, I'd like to hear your views on the organic profile of the Retail business, especially regarding 180, since you've had more time to evaluate it.

Greg, first off, as it relates to the numbers that we talked about in the announcement and the revenue and expense synergies, we talked about capturing those over the next 3.5 years. So nothing's changed on that from what we talked about in the previous call. As it relates to the two businesses, risk strategies and 180, I would make this comment. Number one, we have been very impressed with the talent inside both of the organizations. So they do have deep specializations and very talented people, and that's very nice. I've met a lot of them now or talked to a lot of them, which I can confirm that, that is absolutely true. As it relates to 180, not unlike our program facilities, they have a deep commitment to underwriting, and they have more of a casualty book of business than a property-driven or cat-heavy book of business. And some of those are tougher classes of business, meaning transportation and some other things. And so I continue to be very, very impressed with the discipline and the people in those businesses. And we believe that, as I think we said the last time, that their growth profile is substantially similar to ours over time. And so we feel really good about the business, overall, individual divisions, the whole deal. We're excited about it.

Just a clarification, and it's just because I've been getting some inbound questions on it. Can you just spend a second and talk about the $750 million set aside that happened and talk about your perspective and the due diligence you did around that?

Sure. As we said before, they have some discontinued operations that are in runoff. And basically, we felt that it would be appropriate to have a set aside for those operations. And when those are all wrapped up, that whole thing will be wrapped up as well. So we felt really good process. We did a lot of work around it, but I want to stress that it's not something that they do anymore. And those operations or accounts are just in runoff.

I wanted to come back to just the Retail segment, right. Prior guidance was for the full year to be about 1% better than the Q1. It does, from your commentary, sound right like new business was slower and pricing got worse. Powell, sorry, I think you said, right, half of the change in the quarter was due to just the deceleration in property rates. I'm just trying to get a sense of how do you guys see, I guess, the full year relative to that prior guide based on your expectations for continued deceleration in property rates in the back half of the year?

So I said that the deceleration or the downward pressure on rates was over half the discrepancy, and I believe that you and everyone else needs to factor that into your organic growth expectations in Q3 and Q4.

Okay. Did you notice if the slowdown in June was more pronounced compared to the rest of the quarter? I'm trying to understand the pace of the slowdown you experienced during that time.

Elyse, yes, we saw during the quarter, and then June definitely had a further trail off compared to what we were seeing in April and May.

Okay. And then on the Programs, you called off some one-off impact on margins in the slides. Can you just provide a little bit more detail on what that was in the quarter?

We mentioned that we had an adjustment on the contingent calculation for last year once we finalized all the numbers. This had a positive effect on the margin for the quarter, which we were referring to.

Focusing on organic growth from a top-down perspective, I'm observing a trend of year-over-year deceleration. You've mentioned that some of this may stem from reduced new business, which could be temporary. However, aligning this deceleration trend with your comments about a generally weakening marketplace, I'm curious if there are any underlying factors that explain why the deceleration is occurring at a faster pace than we've historically experienced. Are there specific trends we should pay closer attention to, especially considering you highlighted several areas of softening, such as casualty, which was somewhat unexpected?

Yes. I don't want to give you the impression that the casualty market is negative. I want you to understand that we don't believe casualty pricing will increase as quickly. This is important, and I apologize if I suggested otherwise. What I can tell you is that we are experiencing a classic cycle. I've been in this industry for 35 years and have seen this happen several times. Pricing, especially in property, usually rises rapidly, particularly in the Excess and Surplus market, but can also decline just as quickly. Many carriers have made commitments regarding their portfolios and purchased reinsurance to back those portfolios, and they want to utilize that capacity. This typically leads them to adopt a stance where they do not want to lose their renewals. New underwriters and markets also believe that the rates are sufficient and want to write enough business to support their reinsurance programs. Currently, there is more pressure in the market than we have seen before. There has been a prolonged period of upward pressure on property rates, which is beneficial for customers but creates challenges for organic growth across the industry. In Q2, we had a significant amount of property, and this situation is more evident. However, I want to clarify that what is happening is not unusual. There's nothing strange or unexpected about it. This is exactly what we anticipated. I personally expected this to occur a year ago. The surprising element has been the speed of the decline in Q2, especially in the latter part of the quarter. That’s the distinction we’re discussing—it's not that we were caught off guard by the decline itself, but rather by how quickly it has happened.

And Mike, I think, maybe one other thing. Again, we've been talking about this for almost two years where we've been saying we expect things to be moderating back to more normal, right, in the back end of what happened through COVID. But in our earlier comments, we said that admitted rates were up 5% to 10% in the second quarter of last year. That's not normal. To get that level of broad-based increases. So we were 2% to 7% in the first quarter, 1% to 5%. It's now starting to get back to kind of more realistic ranges of what you would see historically. So part of it is off of where was it coming from.

Got it. That's helpful information. My only follow-up is regarding profit margins or cash flow margins, whichever you prefer to discuss. If we envision a return to a more typical organic growth trajectory, perhaps high fives over ten years, and during softer market conditions, low singles, should we also consider the possibility of a downward trend in profit margins if we enter a low singles organic environment? Or has the shift in business mix occurred to the extent that we are now at a much higher profit margin level on a broader scale?

Yes, Mike. We're not making any long-term changes to our margin guidance; it remains the same for the business at this time. However, it's important to note that we have a highly diversified business, and there can be variations in growth from quarter to quarter. While organic growth is a key component, it's not the only factor at play. Even if organic growth declines, strong contingents can enhance our margin profile. Historically, we've been successful in achieving profitable growth due to our exceptional leadership. Although we may experience fluctuations in our quarterly performance, our focus is on making the right long-term investments in talent and technology to expand our margins. While this goal may not be reached every quarter, it remains our overall priority for the business.

I wanted to circle back on the comments on the lower new business. And just wanted to see if you could give us a feel for how much of that this quarter was just timing and maybe you'd characterize as more random fluctuation as opposed to what's going on in the market? And you talked a little bit here or there about some of the new markets that are competing and so forth. How much of those dynamics causing that versus things just got one way or the other this quarter?

I don't want to give the impression that something unusual is happening in the market that affects our ability to write new business. It's quite simple; we just didn't write as much new business for the quarter. Sometimes you write more, and sometimes less than expected. One quarter doesn’t define a trend, and new business is essential for our company. We know this, and when we combine it with the importance of caring for our existing customers through our team, you see the customer lifecycle at Brown & Brown. There's nothing else to point to except that we simply didn’t write as much new business. Sometimes we don't win on certain accounts, but overall, we just didn’t write as much, though we anticipate writing more next quarter. I won't say there's a delay or anything specific; there are always factors that can cause shifts, but that’s all I’ll say on the matter.

Got it. That makes a lot of sense. Can I ask if the E&S pricing and competition you're seeing is any of that affecting volume just in terms of admitted versus E&S? Like is some of the competition from admitted taking business back at all?

Yes, please don’t misunderstand my comment. We have observed some admitted markets starting to reclaim business across various segments. This includes binding authority in wholesale and transactional wholesale. However, I want to clarify that it’s not significant enough to call it a major trend. For example, about a year ago, California was facing severe fires and market disruptions, which led to an influx of business into the E&S market. While there is still business entering the E&S market, it appears that the insurance commissioner in California has found a way to encourage some admitted markets to return, and we are noticing that some of them are writing personal lines there. This observation is anecdotal and should not be published as there isn’t enough data to substantiate it. For instance, if I hear that a certain company is writing 15 homeowners in the admitted market when they avoided it last year, that raises some eyebrows. This reflects the limited involvement of some non-admitted accounts in the ongoing changes with admitted markets.

I think you mentioned you expect to increase the margin of acquired businesses over time for tuck-in M&A. Can you maybe just touch on how long do you usually find it takes to get those acquired entities to target levels?

It truly depends on the business, Andrew. And again, you made an assumption there I think that may or may not be fair. I can see why you made the assumption. But the acquisition that we referred to is a stand-alone business. So I do want to make a distinction there. So you would think normally that in a business that folds into an existing business, we would get to the margin, the targeted margin more quickly. But the business that Andy referred to is a standalone business. So it takes a little longer, obviously.

Our approach to acquisitions, particularly for stand-alone businesses, is not to completely overhaul everything from the start. We believe that is not an effective method. Instead, you will see us gradually make improvements over the quarters in various areas, capitalizing on synergies which will eventually lead to improved margins. The same goes for revenue, which will also grow over time. You can expect to observe these changes over a period of 12, 24, or 36 months.

And then maybe on Professional Liability or D&O more broadly. Could you maybe just talk about what you're seeing in terms of rate? Is there any bottoming going on there? And are you seeing any pipeline of exposure units coming to market?

Well, I would say that, as we said, D&O and EPL continue to have rate pressure on them. And I think that that will continue. That's my impression.

Powell, you've talked about economic growth explaining, call it, two-thirds to three-quarters of organic growth, with the rest being from pricing. That was a smaller different Brown & Brown. I was hoping you could update us on that split between economic growth and pricing in terms of driving organic.

What I would say is that I need to take some time to respond to that, especially after we incorporate Accession into Brown & Brown and consider the specifics of the 180. However, I can tell you that our business has unique components. There’s the core middle market and upper middle market segments, along with our risk strategies division. In a stable economy, I wouldn’t expect significant changes to those metrics unless there is an unusual concentration of catastrophic property in a particular quarter. I would maintain that two-thirds figure. For large accounts, particularly in the upper middle market, we see substantial benefits, with some of that derived from rates and some from fees and commissions, which may vary slightly. In terms of programs and wholesale, within wholesale, there are both binding authority and transactional components. Given the structure of our portfolio—keeping in mind that these observations predate Accession’s integration—our Programs business has been more significantly influenced by rates due to the concentration of catastrophic events, which is why I've mentioned that the casualty segment serves as a stabilizing factor. The wholesale aspect is affected in a similar manner, albeit to a lesser extent. You posed a pertinent question, and I’d like to reflect on it further, particularly regarding the existing dynamics of our business and our overseas operations, which likely mirror this trend with exposure units and rates following a similar two-thirds to one-third split.

Meyer, keep in mind, and I think our comment still holds over the long term, the one-third, two-thirds, depending upon where we are in a cycle, either on the uptake or downtake inside there, rate is just going to represent a larger portion. And so we've talked about that in the past that rate was making up more like 50%. And I think that's similar to the comment that we said this quarter. When you have those bigger swings, it's just going to take a larger percentage of it on a weighting basis. But when you're kind of in that normal market growth, normal pricing and everything else, generally, I think the trend is still pretty consistent with what we said.

That was very thorough and helpful. My second question is about performance. Is there a range where, if performance is slightly below expectations, you have a specific number in mind? For example, do you consider a normal fluctuation of 50 basis points of organic growth, and anything worse than that a problem? I'm looking for a numerical answer, but I would appreciate it if you could also discuss it qualitatively.

Certainly. Let me address that. As Andy mentioned earlier, we've always indicated that our business typically experiences low to mid-single-digit organic growth in a stable economy. There may be short-term fluctuations due to certain events like rates and economic conditions, which can affect this growth range. However, over the long term, this is how we view the business. I understand your concern, but I want to emphasize that we don't think one quarter defines a trend. In our Retail sector, which you referenced, we did not perform as well as we expected for the quarter, and there are reasons for that. However, I don’t want you to think that we believe there is a fundamental issue; quite the opposite. I feel very optimistic about our business, especially with the addition of Accession. I believe in our ability to serve our customers now more than ever. While surprises in a changing market can happen, we remain committed to growing our business, running it profitably, and reinvesting thoughtfully over time. I’m confident about our future and don’t see any significant issues either numerically or qualitatively. We have a talented team dedicated to our culture, which is vital for our organization. In the long run, this approach has proven effective. So, while that was last quarter’s performance, we are focused on moving forward into the current quarter.

Meyer, just on, I mean, I think this is why we never get too worked up about any one quarter that's out there. We just kind of look at how we're progressing and moving the ball down the field on a year-to-date basis on an annual basis. And we feel awesome about where we are at the half year mark. We've grown the top line over 10%. We're over 5% on an organic basis. Our margins are over 37%. We've got double-digit EPS growth. Our conversion is over 20%, which is outstanding. We've grown at 44% year-over-year. We think we're in really good shape at the half year mark. And the quarters always move around. We don't get too anxious about those things. So...

We've just come off a very interesting time economically in the country. Obviously, the reopening post-COVID and a huge growth period. Prices were up for a number of years in a row. Underwriting profitability for the industry is very, very good. I've been looking at the stock for 20 years. And I think back when I first heard the term EBITDAC, the argument was that the C, earn-outs are going to be both positive and negative and should net to 0 over time. But most of the acquisitions that anyone has done in the past half-decade have turned out to be wildly successful and maximize their earnouts in any way. Is that the right impression? Should we think about that normalizing? And how much organic growth did earn-outs contribute over the last couple of years?

Jeff, let me address a couple of those points. Our approach involves assessing the changes in acquisitions based on our business expectations at the time of purchase. We already have projections for growth or profitability for the business, and most of our earn-outs typically span a three-year timeframe. We make these estimates upfront. Looking back over the past ten years, although I may not have the exact figures due to adjustments related to COVID, our changes in acquisition earn-outs have been relatively minor. We effectively estimate performance, which may already include expectations of strong outcomes, but these are factored into the initial earn-out. Therefore, I wouldn’t want you to assume that the changes in acquisition reflect that the businesses were extraordinarily successful on their own; they might have been successful regardless. So, there are several factors to consider regarding how this all works.

Do you anticipate that to normalize? Was that an extreme way to describe it, but let's use it in terms of being very successful. Should the earnouts and performance of acquired businesses be more moderately successful in the upcoming period?

I don't think you can draw that conclusion. It's highly dependent upon the business and how the economic and operating environment impacts that individual business. So I wouldn't draw that conclusion. However, at a macro level, the question is whether growth rates in the brokerage space are returning to more traditional levels, and the answer is yes. That said, I don't think you should focus solely on acquisitions. Keep in mind that how you handle acquisitions can affect organic growth after the second year in our business. So it's just something to consider. Yes.

Yes, you might have a specialty business that is experiencing rapid growth while another business grows at a more moderate pace. It really depends on their specific profiles.

Powell, in the Florida excess and surplus data, you see a big jump in policy counts in the E&S market. At the same time, you've got a meaningful decline in premium per policy. So it seems like a lot of more people are doing business in the E&S market but at a lower price point. Do you think that's accurate? And if so, is that a new phenomenon?

I don't think this is a new trend, Mark. In a changing market, it's common to see increases in submission counts and policies moving into non-admitted markets as people seek to capture savings. We've experienced this before; it's not a new occurrence in terms of historical cycles. The E&S market offers numerous growth opportunities when the market is rising, and although it's more challenging, it can still grow when rates fall. However, during flat market conditions, which are rare, it's less than ideal for the E&S space. I usually view the market as either trending up or down rather than flat. You may observe stability in standard markets while still seeing growth. That's a lengthy explanation for your question.

of the week with our new teammates from Accession. And we believe that the opportunities together are very good, and we look forward to talking to you next quarter. Have a nice day and a nice week. Thank you.