DEF: Brown & Brown Reports Strong Revenue, Misses Organic Growth

Brown & Brown, Inc. announces robust 2025 revenue growth and strategic acquisitions, alongside a decline in diluted EPS and missed organic revenue targets, as detailed in its latest proxy statement.

Summary

• The Annual Meeting of Shareholders will be held virtually on Wednesday, May 6, 2026, at 9:00 a.m. (EDT).
• In fiscal 2025, total revenues grew by approximately 23% to over $5.9 billion.
• Net cash from operating activities increased from approximately $1.2 billion to nearly $1.5 billion in 2025.
• The company completed 43 high-quality acquisitions in 2025, adding approximately $1.8 billion in annual revenues, including the largest acquisition in its history, RSC Topco, Inc. (Accession).
• The dividend was increased for the 32nd consecutive year, returning approximately $193 million to shareholders in 2025.
• Diluted earnings per share decreased to $3.16 in 2025 from $3.46 in 2024.
• Company Organic Revenue growth was 2.8% in 2025, significantly below the target of 6.4%.
• Executive compensation for 2025 saw annual cash incentives paid below target amounts due to the organic revenue shortfall, despite a strong Adjusted EBITDAC Margin of 36.0%.
• The Board of Directors recommends shareholders vote FOR the election of fourteen director nominees, ratification of Deloitte & Touche LLP as independent accountants, approval of named executive officer compensation on an advisory basis, and an amendment to the 2019 Stock Incentive Plan to increase shares and extend its term.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as mixed. While strong top-line revenue growth and significant strategic acquisitions are positive, the decline in diluted EPS and substantial miss on organic revenue targets indicate underlying challenges. Management's proactive adjustments to compensation and new long-term incentive plans suggest a commitment to addressing these issues and driving future growth, but the 2025 performance itself presents areas of concern.

Positives

• Total revenues grew by approximately 23% to over $5.9 billion in 2025.
• Net cash from operating activities increased from approximately $1.2 billion to nearly $1.5 billion in 2025.
• Operating margins expanded, maintaining an industry-leading position with an Adjusted EBITDAC Margin of 36.0% in 2025, up from 35.3% in 2024.
• Completed 43 high-quality acquisitions in 2025, contributing approximately $1.8 billion in annual revenues.
• The acquisition of RSC Topco, Inc. (Accession) was the largest in company history, adding over 5,500 teammates and enhancing market relationships.
• Increased the dividend for the 32nd consecutive year, returning approximately $193 million to shareholders in 2025.
• Welcomed Joia M. Johnson as a new independent director, bringing extensive leadership experience.
• Shareholders approved executive compensation by a significant margin (96% of votes cast) at the 2025 Annual Meeting.
• Equity incentive awards granted in February 2022 achieved above maximum performance levels for both Average Organic Revenue Growth (9.6%) and Adjusted EPS ($8.50) for the 2022-2024 performance period.
• Special long-term performance-based equity incentive awards were approved in March 2026 to incentivize rigorous performance and long-term retention of key leaders following the Accession acquisition.

Negatives

• Diluted earnings per share decreased to $3.16 in 2025 from $3.46 in 2024.
• Income before income taxes margin decreased to 23.2% in 2025 from 27.1% in 2024.
• Company Organic Revenue growth was 2.8% in 2025, significantly below the target of 6.4%, primarily due to higher flood claims processing revenue in the prior year, timing of certain non-recurring revenue items, slowing rate increases, rate decreases for certain lines of coverage, adjustments to incentive commissions, and a regulatory change in the UK.
• Retail segment Organic Revenue growth was 2.8% in 2025, below the target of 5.6%.
• Specialty Distribution segment Organic Revenue growth was 1.8% in 2025, below the target of 7.5%.
• Annual cash incentives for Named Executive Officers were calculated and paid below target amounts due to the shortfall in organic revenue growth.
• The Chief Executive Officer's 2025 target total pay was below the 25th percentile of the market blend of the peer group and general industry, leading to a $250,000 increase in 2026 base salary and a $1,750,000 increase in 2026 target cash incentive.
• The Chief Financial Officer's 2025 target total pay was below the median of the market blend of the peer group and general industry, leading to a $100,000 increase in 2026 base salary and a $400,000 increase in 2026 target cash incentive.
• Chris L. Walker's 2026 base salary was decreased by $150,000 due to a reduction in responsibilities following his transition to Chairman of the Specialty Distribution Segment.

Risks

• The Board and its committees actively oversee management of operational, financial, strategic, acquisition-related, technological, competitive, reputational, legal, and regulatory risks.
• Cybersecurity risks are regularly reviewed by the Audit Committee, with reports from the Chief Security Officer and Chief Information Security Officer.
• Potential conflicts of interest are considered by the Nominating/Corporate Governance Committee.
• The company acknowledges that adverse consequences associated with business risks can never be fully eliminated.
• Uncertainties exist regarding the application and interpretation of Section 162(m) of the Internal Revenue Code after the Tax Reform Act, potentially disallowing tax deductions for executive compensation exceeding $1 million.
• There is no assurance that the Internal Revenue Service will not treat some or all security-related costs for executive officers as compensation rather than business expenses, which could impact tax deductibility.

Future Outlook

The company anticipates the economy will moderate to more traditional growth rates, with insurance premium rates remaining relatively stable or slightly decreasing for catastrophic-exposed property. Insurable exposure units are expected to grow at a slower pace than in 2024, and salary inflation is projected to moderate. Continued investments in technology, artificial intelligence, security, and data are planned to improve customer and teammate experience. The company has adjusted executive compensation for 2026 based on market assessments and approved special long-term performance-based equity incentive awards designed to incentivize aggressive post-acquisition growth strategy and long-term retention of key leaders over a five-year performance period (2026-2031). The company intends to register additional shares under the 2019 Stock Incentive Plan on Form S-8 as soon as reasonably practicable.

Management Comments

• "Fiscal 2025 was another successful year for Brown & Brown, marked by several key financial and operational achievements."
• "As A Forever Company, we continue to prioritize long-term shareholder value creation via our disciplined capital allocation strategy."
• "Our Board of Directors remains focused on identifying and attracting high-quality directors whose skills and experience can help us achieve long-term success, while also meeting the demands of the increasingly complex global marketplace."
• "We believe our compensation system continues to effectively incentivize our executive officers to deliver results for the Company that are aligned with the long-term interests of our shareholders."
• "We believe our compensation policies and principles, in conjunction with our internal oversight of those policies and principles, reduce the possibility of imprudent risk-taking."
• "We believe the scope and costs of these measures serve important business purposes and constitute reasonable, necessary and appropriate expenses for the benefit of the Company and its shareholders."

Industry Context

StockSavvy.ai notes that Brown & Brown's strategic acquisition of Accession, the ninth largest privately held insurance brokerage in the U.S., significantly expands its market relationships and capabilities, reflecting a continued trend of consolidation within the insurance intermediary sector. The realignment of business segments from three to two (consolidating Programs and Wholesale Brokerage into Specialty Distribution) is a direct consequence of this major acquisition, aiming for operational efficiencies and a more streamlined structure. The company's compensation practices are benchmarked against a diverse peer group of publicly traded insurance carriers and intermediaries, including industry giants like Aon plc, Arthur J. Gallagher & Co., Marsh & McLennan Companies Inc., and Willis Towers Watson PLC, indicating a competitive landscape for talent and market positioning. The emphasis on attracting and retaining high-quality talent, particularly through special long-term equity awards, underscores the intense competition for skilled professionals in the insurance industry.

Comparison to Industry Standards

• Operating margins are described as 'industry-leading,' suggesting superior efficiency compared to peers.
• The 32nd consecutive annual dividend increase demonstrates a consistent commitment to shareholder returns, a benchmark of financial stability and strong capital management within the insurance sector.
• Executive compensation levels for 2025 were assessed against a peer comparison group including Aon plc, Arthur J. Gallagher & Co., AXIS Capital Holdings Limited, Chubb Limited, Global Payments Inc., Marsh & McLennan Companies Inc., Moodys Corporation, RLI Corp., Selective Insurance Group Inc., SiriusPoint Ltd., Sylvamo Corporation, The Hanover Insurance Group, Inc., Willis Towers Watson PLC, W.R. Berkley Corporation, and Regions Financial Corp.
• The Chief Executive Officer's 2025 target total pay was found to be below the 25th percentile of the market blend of the peer group and general industry, indicating a potential lag in CEO compensation relative to comparable roles.
• The Chief Financial Officer's and other Named Executive Officers' 2025 target total pay was below the median of the market blend of the peer group and general industry, suggesting their compensation was also below the midpoint of industry standards.
• In October 2024, the company's total revenue was at the 24th percentile and market capitalization at the 65th percentile of its peer comparison group, indicating a smaller revenue base but a higher market valuation relative to its size.
• Following the Accession acquisition, the company's anticipated annual revenue of approximately $7 billion placed it at the 40th percentile, and its market capitalization at the 53rd percentile of the updated peer comparison group in October 2025, showing an improved revenue position relative to peers.

Management Changes

Corporate Governance

Legal Proceedings

• In 2022, the company recognized a decrease in expense related to a legal judgment entered against it in 2020, which was associated with pre-acquisition activities of a business acquired in 2012.
• In the first quarter of 2023, an amount was expensed and substantially paid to resolve a business matter, which was considered non-recurring.

Related Party Transactions

• The company leased a Cessna Citation Sovereign aircraft from Zambezi, LLC (owned by J. Hyatt Brown and his wife) for $100,368 in 2025. J. Hyatt Brown reimbursed the company $140,233 for personal use of the aircraft.
• Zambezi, LLC paid the company $36,015 for hangar space and $405,645 for pilot/mechanic services and supplies in 2025.
• Andrew M. Walker (son of Chris L. Walker, EVP) received $310,643 in compensation, $694 in cash dividends, and $13,253 in 401(k) matching contributions in 2025, plus equity grants in February 2025 ($29,938) and February 2026 ($29,259).
• Alexander J. Walker (son of Chris L. Walker, EVP) received $201,447 in compensation, $303 in cash dividends, and $9,070 in 401(k) matching contributions in 2025, plus equity grants in February 2025 ($19,884) and February 2026 ($19,483).
• Ashley W. George (daughter of Chris L. Walker, EVP) received $124,492 in compensation and $4,945 in 401(k) matching contributions in 2025. The company also paid $2,500 for her personal cybersecurity monitoring and support.
• The company maintains a money market account with a balance of approximately $6.2 million with Ameris Bank, where H. Palmer Proctor, Jr. (Lead Independent Director) serves as Chief Executive Officer and a director of its parent company.
• The company received approximately $308,000 in revenues in 2025 from US Premium Finance, a division of Ameris Bank, in connection with insurance premium financing contracts.
• J. Hyatt Brown, J. Powell Brown, and H. Palmer Proctor, Jr. are investors in a fund managed by an entity in which Lawrence L. Gellerstedt III (Independent Director) is a partner.
• Theodore J. Hoepner (Independent Director) is an investor in a bank holding company where J. Hyatt Brown and J. Powell Brown are also investors, and the company maintained a bank account with approximately $1.7 million balance in 2025 with this bank.

Stakeholder Impact

• Shareholders: Directly impacted by the company's financial performance, including revenue growth, diluted EPS decline, and operating margins. The proposed amendment to the 2019 Stock Incentive Plan could lead to dilution but aims to retain key talent. Dividend increases provide direct returns.
• Employees (Teammates): The company's compensation philosophy and incentive programs are designed to attract, motivate, and retain high-quality talent. The Accession acquisition added over 5,500 new teammates, expanding career opportunities. Benefits like 401(k) and health plans are provided.
• Customers: The Accession acquisition enhances market relationships and brings new capabilities, aiming to improve service offerings. Continued investments in technology, data, and analytics are intended to create innovative solutions for customers.
• Suppliers/Carrier Partners: The company's strategy includes fostering deep and trusted relationships with insurance carrier partners, which can lead to expanded capacity for new business and differentiated offerings.
• Creditors: The disciplined capital allocation strategy and conservative leverage profile are intended to maintain financial stability, which is beneficial for creditors.

Next Steps

• Shareholders will vote on the election of fourteen director nominees at the Annual Meeting on May 6, 2026.
• Shareholders will vote on the ratification of Deloitte & Touche LLP as independent registered public accountants for fiscal year 2026.
• Shareholders will cast an advisory vote to approve the compensation of named executive officers.
• Shareholders will vote on an amendment to the 2019 Stock Incentive Plan to increase shares available for issuance and extend its term.
• The company intends to register the additional shares of common stock issuable under the 2019 SIP on Form S-8 as soon as reasonably practicable.
• The Board will continue to focus on identifying and attracting high-quality directors.
• Management will continue to implement security measures for executive officers as recommended by an independent study.
• The company will monitor the tax treatment of security-related costs and may adjust the program as appropriate.
• Shareholder proposals for the 2027 Annual Meeting must be received by November 24, 2026.

Key Dates

Recommendation

While the company demonstrated robust total revenue growth and strategic acquisitions in 2025, the notable decline in diluted EPS and a significant shortfall in organic revenue growth against targets present a mixed financial picture. Management's proactive adjustments to executive compensation for 2026, including increased base salaries and target cash incentives for some, and a decrease for another due to reduced responsibilities, indicate an acknowledgment of performance areas needing improvement. The introduction of special long-term performance-based equity awards tied to rigorous share price and EPS targets aims to re-align management incentives with aggressive future growth and shareholder value creation. However, the immediate underperformance in key organic growth metrics and diluted EPS suggests a 'hold' position is warranted as investors await evidence of successful integration of recent acquisitions and a rebound in organic growth, which are critical for sustained long-term value.

Keywords

Insurance Brokerage, SEC Filing, Proxy Statement, Annual Meeting, Executive Compensation, Corporate Governance, Acquisitions, Organic Revenue Growth, Financial Performance, Dividend, Stock Incentive Plan, Risk Management, Board of Directors