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    BRO
    Earnings call· Jun 2026(Q2 FY26)

    BROWN & BROWN Q2 FY26 earnings call BRO

    Jul 28, 2026 Source

    Executive summary

    Brown & Brown Q2 FY26 — Strong Organic Growth with Contingents and AI Partnerships

    Brown & Brown reported a mixed Q2 FY26, with strong total revenue growth driven by acquisitions and robust contingent commissions, offsetting a decline in organic revenue excluding contingents. The company is actively investing in AI partnerships and talent acquisition to drive future organic growth and margin expansion, while navigating competitive insurance markets and managing the integration of Accession. Management remains confident in its capital allocation strategy, balancing share repurchases, debt reduction, and strategic M&A.

    Highlights

    5

    • Total revenues grew 30.4% to $1.7 billion in Q2 FY26.

    • Organic revenue, including contingents, increased 70 basis points.

    • Adjusted earnings per share grew nearly 4% to $1.07.

    • Retail segment delivered organic growth, including contingent, of 2.5%.

    • Cash flow from operations increased $70 million or 13% compared to H1 FY25.

    Concerns

    5

    • Organic revenue, excluding contingents, decreased 70 basis points.

    • Adjusted EBITDAC margin decreased 100 basis points to 35.7% due to lower interest income.

    • Specialty Distribution organic revenue was negative 1.6% with contingents and negative 3.5% without, impacted by $10 million of delayed new business revenue.

    • CAT property rates continue to decrease 15% to 35%.

    • Litigation impact from departed individuals resulted in an $18 million adjustment to retail organic revenue, with a full-year impact of $50 million to $60 million.

    Guidance & targets

    7
    CategoryTargetConfidence
    Retail organic growth (excluding contingents)
    1.5% to 2.5%
    medium materiality
    High
    Specialty Distribution organic growth (excluding contingents)
    2% to 4%
    medium materiality
    High
    Full-year 2026 revenue impact from litigation
    $50 million to $60 million
    medium materiality
    High
    Accession annual revenue
    $1.7 billion to $1.8 billion
    high materiality
    High
    Accession synergies
    $30 million to $40 million
    medium materiality
    High
    Cash flow conversion
    24% to 27%
    medium materiality
    High
    Debt maturity
    $400 million
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Retail
    Growth driven primarily by acquisition activity and organic growth. Enhanced go-to-market sales model is building momentum. Margin increase driven by higher contingents, disciplined expense management, and the impact of synergies. Net benefit to margins of 30-50 bps due to individuals departing to a start-up broker.
    Organic growth (including contingent): 2.5%Organic growth (excluding contingent): 1.5%Negative impact from pharmacy consulting business on organic growth: 60 bpsCurrent period adjustment to organic revenue from litigation: $18 million
    		—35.9%—EBITDAC margin: strong, expanding 230 bps
    Specialty Distribution
    Growth driven by the acquisition of Accession and increased contingent commissions. Organic revenue negatively impacted by delayed new business revenue expected to be recorded substantially in the third quarter. Margin decrease primarily due to lower unit growth and investments in European capabilities, which more than offset higher contingent commissions.
    Organic revenue (with contingents): negative 1.6%Organic revenue (without contingents): negative 3.5%Negative impact on organic revenue from delayed new business: nearly 200 bps (approx. $10 million)
    		—28.1%—EBITDAC margin: 42.7%, decreased 400 bps

    Operational metrics

    28
    Organic Revenue Growth (excluding contingents)
    -70YoY
    Q2 FY26

    Organic revenue decreased 70 basis points from the prior year.

    Organic Revenue Growth (including contingents)
    70YoY
    Q2 FY26

    Organic revenue increased 70 basis points when including organic contingents.

    Adjusted EBITDAC Margin
    35.7decreased 100 bps YoY
    Q2 FY26

    Adjusted EBITDAC margin decreased 100 basis points to 35.7%, driven substantially by lower interest income.

    Adjusted Earnings Per Share Growth
    3.9YoY
    Q2 FY26

    Adjusted earnings per share grew nearly 4% to $1.07.

    Contingent Commissions Growth
    40YoY
    Q2 FY26

    Contingent commissions grew by an impressive $40 million or $24 million coming from Accession.

    Income Before Income Taxes Growth (Adjusted)
    17.4YoY
    Q2 FY26

    Income before income taxes increased by 17.4%.

    Adjusted EBITDAC Growth
    27YoY
    Q2 FY26

    EBITDAC grew by 27%.

    Accession Total Revenues
    410
    Q2 FY26

    We recognized total revenues of approximately $410 million for the quarter from Accession.

    Disposed Noncore Retail Business Annual Revenues
    30 to 35
    Annual

    Disposed of a noncore retail business with nonrecurring annual revenues of approximately $30 million to $35 million.

    Effective Tax Rate
    24.6slightly below Q2 FY25
    Q2 FY26

    Our effective tax rate for the quarter was 24.6%, slightly below the second quarter of 2025.

    Weighted Average Shares Outstanding
    334increased $41 million
    Q2 FY26

    Our weighted average shares outstanding increased by approximately $41 million to $334 million.

    Shares Repurchased
    9
    last 9 months

    Partially offset by approximately 9 million shares we repurchased over the last 9 months.

    Dividends Paid Per Share Growth
    10YoY
    Q2 FY26

    Our dividends paid per share increased by 10% as compared to the second quarter of 2025.

    Cash Flow From Operations to Total Revenues Ratio
    17vs 20% in H1 FY25
    H1 FY26

    Our ratio of cash flow from operations to total revenues was 17% for the first 6 months of this year as compared to 20% in the first half of last year.

    Capital Deployed for Share Repurchases
    500
    past 6 months

    During the past 6 months, we deployed $500 million to repurchase approximately [ 8 billion ] shares.

    Shares Repurchased (past 6 months)
    8
    past 6 months

    During the past 6 months, we deployed $500 million to repurchase approximately [ 8 billion ] shares. (ASR error, likely '8 million' shares based on context and typical share counts for BRO.)

    Retail EBITDAC Margin Expansion
    230YoY
    Q2 FY26

    Our EBITDAC margin was strong, expanding 230 basis points from the second quarter of last year.

    Retail Expense Benefit (one-time accrual adjustments)
    110
    Q2 FY26

    We realized an expense benefit of approximately 110 basis points for certain onetime accrual adjustments.

    Retail Margin Benefit (departed individuals)
    30 to 50
    Q2 FY26

    Net benefit to our margins of approximately 30 to 50 basis points due to individuals that departed to the start-up broker.

    Specialty Distribution EBITDAC Margin
    42.7decreased 400 bps YoY
    Q2 FY26

    Our EBITDAC margin decreased 400 basis points to 42.7%.

    Specialty Distribution Contingent Commissions (Acquisition Activity)
    12
    Q2 FY26

    Higher contingent of $21 million were driven by $12 million of acquisition activity.

    Specialty Distribution Contingent Commissions (Favorable Underwriting Performance)
    9
    Q2 FY26

    Higher contingent of $21 million were driven by... $9 million from favorable underwriting performance.

    Medical Costs Increase
    8% to 10
    Q2 FY26

    Medical costs remain up 8% to 10%.

    Pharmacy Costs Increase
    over 10
    Q2 FY26

    Pharmacy costs were up again over [ 10% ].

    CAT Property Rate Decrease
    15% to 35
    Q2 FY26

    In property, CAT rates continue to decrease 15% to 35%.

    Primary Casualty and Professional Liability Rate Increase
    up 5
    Q2 FY26

    Primary casualty and professional liability are generally up 5%.

    Workers' Comp and Non-CAT Property Rates
    flat to down 5
    Q2 FY26

    Workers' comp and non-cap property were generally flat to down 5.

    AI Impact on Growth and Margin
    incremental organic growth and margin expansion
    over coming quarters and years

    We do anticipate incremental organic growth and margin expansion will occur over the coming quarters and years as AI, data and analytics become more embedded in our workflows.

    Industry KPIs

    2
    MetricValueDetails
    Capital returns$500 millionUSD
    Renewal rate change pricingvaries%

    Deals & partnerships

    1
    McKinsey, Accenture, and AnthropicPartnerships to accelerate AI initiatives and strategy.

    These partners are helping us accelerate the work we've already done with AI and helping us think more broadly pertaining to the holistic application of these solutions. Each organization is a leader in its field and bring specific expertise that will support our ongoing AI strategy.

    Risks & headwinds

    5
    Declining CAT property ratesQ2 FY26, similar to Q1 FY26, expected to continue in H2 FY26

    decrease 15% to 35%

    Mitigation: Customers benefiting from lower pricing, redirecting savings to change structures, limits, or deductibles. Company maintains underwriting discipline.

    Litigation impact from individuals departing to start-up brokerQ2 FY26 and FY26

    $18 million adjustment to Q2 retail organic revenue; full-year 2026 revenue impact of $50 million to $60 million

    Mitigation: Hiring new talented people to replace positions, leveraging the event to galvanize the team.

    Geopolitical instability, inflation, and potential for higher interest ratesH2 FY26

    heightened levels

    Mitigation: Business leaders will remain cautious, pursuing growth opportunities while navigating challenges.

    E&S market competition from admitted markets and programscurrent

    more competition today

    Mitigation: Company maintains disciplined underwriting, leveraging new casualty-driven programs.

    Uncertainty of future AI costs and utilizationfuture

    not fully understood

    Mitigation: Consciously moving costs from 'running the business' to data analytics, innovation, and AI; value management office to ensure clear KPIs and value drivers for AI initiatives.

    What to watch in Q3 FY26

    5

    Retail organic growth (excluding contingents)

    H2 FY26
    Current1.5%
    Target1.5% to 2.5%

    Why it matters

    Indicates the underlying health and momentum of the core retail brokerage business, crucial for overall organic growth.

    we continue to believe organic growth will improve in both divisions and are anticipating retail organic growth excluding contingents to be in the range of 1.5% to 2.5%

    Q&A highlights

    6

    Inquired about Accession's revenue contribution and if there's seasonality, and how Accession's margin impacts the overall company margin.

    Andy Watts clarified that Accession's revenues are relatively balanced quarterly, with July being a big month. He stated Accession runs around a 35% margin, which aligns with the overall company margin, primarily impacting Specialty Distribution's weighting.

    “On the revenues, the guidance that we gave over a few different quarters, we said, revenues are relatively well balanced between each of them. July is a big month for the business on placements for us. And so that's probably one of the areas has some seasonality to it that moves the revenues around. But I think we were right in the range of about [ 440, 445 ] in the first quarter and [ 410 ] in the second.”

    asked by Michael Zaremski · answered by R. Watts

    2 min read6 chapters

    Detailed Narrative

    01

    AI and Technology Strategy

    Brown & Brown has partnered with McKinsey, Accenture, and Anthropic to accelerate its AI initiatives, focusing on transforming sales, service, underwriting, and support functions. The company believes AI will enhance teammate capabilities and customer outcomes, not replace risk advisors. They anticipate incremental organic growth and margin expansion over the coming quarters and years as AI becomes more embedded in workflows, without immediate incremental technology spend due to resource reallocation.

    02

    Insurance Market Conditions

    Commercial insurance pricing remained broadly consistent with Q1 FY26, with some moderation. Admitted market rates were generally flat to down 5% for workers' comp and non-CAT property. Primary casualty and professional liability were up 5%, while excess casualty experienced more rate pressure. CAT property rates continued to decrease 15% to 35%, similar to Q1, driven by significant capital seeking to underwrite risk.

    03

    Economic Outlook

    Economic conditions remained stable, with consistent customer spending patterns and modest capital investment. Positive audit premium activity suggests business growth. Key concerns for customers include inflation, oil prices, and geopolitical matters. Management expects cautious business leadership and similar investment/hiring levels in the second half of the year.

    04

    Capital Allocation Strategy

    The company's capital allocation priorities include hiring talented people for organic growth, share repurchases (viewed as attractive), and strategic acquisitions that offer specialism rather than just scale. Debt reduction and technology investments are also key components of their strategy to drive long-term shareholder value.

    05

    Contingent Commissions Dynamics

    Contingent commissions grew by $40 million, with $24 million from Accession, driven by minimal storm claims and higher underwriting profitability, especially in Specialty Distribution. Retail also saw strong contingents due to enhanced carrier engagement. The company emphasizes that its organic growth with contingents is a closer comparison to other brokers who do not break out these commissions.

    06

    Accession Integration

    Accession contributed approximately $410 million in total revenues for the quarter, with margins in line with expectations. The integration is progressing well, with management confident in delivering $30 million to $40 million in synergies this year. The company noted a one-time📎 earn-out payment impact on cash flow but expects strong underlying cash flow going forward⏳.

    AI-generated summary of the company’s earnings call. Not investment advice.