This article first appeared on GuruFocus .
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Fourth Quarter Revenue:$1.6 billion, a growth of 35.7%.
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Organic Revenue Growth:Decreased by 2.8% for the fourth quarter.
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Adjusted EBITDAC Margin:Flat at 32.9% for the fourth quarter.
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Adjusted Earnings Per Share:Increased over 8% to $0.93 for the fourth quarter.
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Full Year Revenue:$5.9 billion, growing 23% in total and 2.8% organically.
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Full Year Adjusted EBITDAC Margin:Approximately 36%, increasing 70 basis points.
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Full Year Diluted Net Income Per Share:Grew over 10% to $4.26.
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Cash Flow from Operations:Nearly $1.5 billion for the full year, growing 23.5%.
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M&A Activity:Completed 43 acquisitions, adding approximately $1.8 billion of annual revenue.
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Retail Segment Organic Growth:1.1% for the fourth quarter.
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Specialty Distribution Organic Growth:Decreased by 7.8% for the fourth quarter.
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Accession Revenue Impact:$405 million for the quarter, below guidance.
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Contingent Commissions:Grew by $37 million for the fourth quarter.
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Effective Tax Rate:21% for the fourth quarter.
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Dividends Paid Per Share:Increased by 10% compared to the fourth quarter of 2024.
Release Date: January 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Brown & Brown Inc ( NYSE:BRO ) achieved a 23% revenue growth for the full year, driven by M&A, organic growth, and strong contingent commissions.
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The company expanded its margins significantly and increased cash flow from operations by nearly 24%.
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Brown & Brown Inc ( NYSE:BRO ) completed the largest acquisition in its history, integrating over 5,000 new teammates from Accession.
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The company maintained a strong EBITDAC margin of 32.9% despite challenges, and adjusted earnings per share grew over 8% to $0.93.
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Brown & Brown Inc ( NYSE:BRO ) generated nearly $1.5 billion of cash from operations, reflecting disciplined working capital management.
Negative Points
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Organic revenue decreased by 2.8% in the fourth quarter, primarily due to a decline in flood claims processing revenue.
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The acquisition of Accession impacted the company's margins negatively by approximately 200 basis points for the quarter.
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Approximately 275 former teammates joined a competitor, taking with them customers representing $23 million in annual revenue.
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The Specialty Distribution segment experienced a 7.8% decrease in organic revenue due to lower flood claims processing revenue and CAT property rate declines.
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Brown & Brown Inc ( NYSE:BRO ) anticipates lower investment income in 2026, which will impact total margins despite underlying business stability.
Q & A Highlights
Q: Have you changed your strategy about retaining your producers following the departure of 275 former teammates to a competitor? Can you discuss your legal defenses regarding your customers and company IP? A: We have not changed our strategy. Our compensation mix of cash and equity based on performance has been effective. This situation is unusual, similar to what other large brokers have faced. Regarding legal defenses, we typically have non-piracy and non-solicitation agreements, generally with a 2-year period on customers and hiring, and perpetual intellectual property protection. We can't discuss ongoing legal actions, but information is publicly available.
Q: Are you seeing a shift of business from the E&S market to the standard market, and what are your expectations for this trend? A: There are accounts that fluctuate between E&S and standard markets, often smaller accounts. We observed some movement back to the admitted market in our binding authority business. It's too early to call it a trend, but historically, we've seen similar shifts. We believe more insured assets will continue moving into the E&S space due to pricing and terms flexibility.
Q: Can you explain the deceleration in casualty pricing increases from 5%-10% to 3%-6%? A: The moderation in rate increases is part of a normal market cycle. The primary business is seeing slight moderation, but excess layers remain under pressure. We don't foresee casualty rates going negative; the current trend reflects market conditions.
Q: Could you clarify the impact of the 275 employees who left on your revenue, particularly in employee benefits? A: The $23 million revenue impact is primarily from employee benefits, with more effect likely early in the year. It's important to note that not all 275 were producers; most were in non-production roles.
Q: How do you view the potential for margin benefits from not incurring compensation costs for the departed employees while retaining revenues? A: While there could be a short-term margin benefit, we are actively rehiring to maintain our capabilities. We don't expect a significant or material impact on margins due to our ongoing hiring efforts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
