Good morning, and welcome to the Brown & Brown Inc. Second Quarter Earnings Call. Today's call is being recorded. Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call, and including answers given in response to your questions, may relate to future results and events or otherwise be forward-looking in nature. Such statements reflect our current views with respect to future events, including those relating to the company's anticipated financial results for the second quarter, and are intended to fall within the Safe Harbor provisions of the securities laws. Actual results or events in the future are subject to a number of risks and uncertainties and may differ materially from those currently anticipated, or desired, or referenced in any forward-looking statements made as a result of a number of factors. Such factors include the company's determination as it finalizes its financial results for the second quarter that its financial results differ from the current preliminary unaudited numbers set forth in the press release issued yesterday, other factors that the company may not have currently identified or quantified and those risks and uncertainties identified from time to time in the company's reports filed with the Securities and Exchange Commission. Additional discussion of these and other factors affecting the company's business and prospects, as well as, additional information regarding forward-looking statements is contained in the slide presentation posted in connection with this call, and in the company's filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, there are certain non-GAAP financial measures used in this conference call. A reconciliation of any non-GAAP financial measures to the most comparable GAAP financial measure can be found in the company's earnings press release or in the investor presentation for this call on the company's website. With that said, I will now turn the call over to Powell Brown, President and Chief Executive Officer. You may begin.

Thanks, Shannon. Good morning, everyone, and welcome to our earnings call. The second quarter was another outstanding one for Brown & Brown. Our team continued to deliver strong net-new business across all segments by leveraging our collective capabilities, or as we say, the Power of WE. I'll provide some high-level comments regarding our performance along with updates on the insurance market and the M&A landscape. Andy will then discuss our financial performance in more detail. Lastly, I'll wrap up with some closing thoughts before we open it up to Q&A. Now let's get into the results for the quarter. I'm on Slide 4. We delivered nearly $1.2 billion of revenue, growing 12.5% in total and 10% organically over the second quarter of 2023. This is now our third quarter of double-digit organic growth out of the last six quarters. Our adjusted EBITDAC margin improved 150 basis points to 35.7%, and our adjusted earnings per share grew 17.7% to $0.93. On the M&A front, we completed 10 acquisitions with estimated annual revenues of $13 million. Overall, it was another great quarter of strong top and bottom-line growth. I'm now on Slide 5. From an economic standpoint, inflation remained elevated but did moderate during the quarter. Consumers continue to spend, driving demand for products and services. However, we continue to see a bifurcation in spending patterns based on income levels of the consumer. In addition, business leaders are making investments in their companies, and new construction projects are starting now that interest rates seem to have plateaued. As a result, many of our customers continue to hire employees but at a slower pace compared to 12 to 24 months ago. From an insurance pricing standpoint, the overall changes in rates for most lines were relatively consistent with the last few quarters, with the exception of the E&S property market. Pricing for employee benefits was similar to prior quarters, with medical and pharmacy costs up 7% to 9%. These ongoing upward pressures and the complexity of healthcare are driving strong demand for our employee benefits consulting businesses. We believe we're very well positioned to help companies of any size navigate this very challenging landscape. Rates in the admitted P&C market continue to be up 5% to 10% for most lines. The downward trend for workers' compensation rates remained with decreases of 5% to 10% in most states. With a low level of unemployment, we expect this trend to continue. For the quarter, rate increases for non-CAT property moderated. We continue to see upward pressure on rates and deductibles for properties located in convective storm zones. As we mentioned last quarter, rate increases for primary casualty layers remain elevated due to the ongoing size of legal judgments in the U.S. and, to a lesser extent, higher levels of inflation. For professional liability, we saw rates flat-to-down 10%. Shifting to the E&S market, CAT property rates moderated throughout the quarter compared to the first quarter of this year and the second quarter of last year. This is not surprising to us as we expected CAT property rates to further moderate until the effects of the storm season are known. In Q1, we placed properties with rates down 10%, to maybe up 10%, and it was relatively balanced. This shifted in the second quarter where many renewals were flat-to-down, and generally only loss-prone or poorly constructed accounts realized rate increases. This continued to be driven by some carriers or facilities willing to put up additional limits combined with some new capital entering the marketplace. We saw some customers increase their limits based on their savings, while others captured the savings as a partial offset to the increases they've absorbed over the past few years. While CAT property rates moderated during the quarter, the rates for primary and excess casualty continued to increase between 1% and 10%. With our highly diversified business, moderate rate increases or decreases for one line of business will generally not have a material impact on our consolidated results. That's why we focus on diversification across lines of coverage, geography, industry, and customer segment, as these drive our consistently strong and industry-leading financial performance. Lastly, the M&A marketplace remained competitive for high-quality businesses. While the number of acquisitions by private equity backers has decreased, they are still active. For the quarter, we acquired 10 great businesses and continued to build relationships with many other companies. I'm now on Slide 6. Let's transition to the performance of our three segments. Retail delivered another great quarter with organic growth of 7.3%, with all lines of business performing well as a result of winning a lot of new customers along with good retention. Insurers are frustrated and exhausted with the level of rate increases over the last few years, which is driving many companies to shop their coverage. Most of the time, this plays to our advantage and has been demonstrated by the growth of our net-new business. This strong and consistent performance is a reflection of our talented team and the breadth of our capabilities. The program segment had another outstanding quarter delivering organic growth of 15.4%. This growth is driven substantially by new business and the expansion of existing customers across many of our programs. The strong performance in the majority of our diverse portfolio of businesses continues to drive impressive growth. Wholesale brokerage delivered another strong quarter with organic revenue growth of 11%. This performance was primarily driven by riding more net-new business within our binding and personalized businesses. Our open brokerage business performed well but did not grow at the pace of the last several quarters due to rate decreases in property. As we've mentioned before, we have strategically built our wholesale business to be well-balanced between brokerage and binding authority, as this diversification helps us deliver consistently strong financial performance. Now I'll turn it over to Andy to get into more details with our financial results.

Thank you, Powell. Good morning, everyone. We're over on Slide 7. I'll review our financial results in additional detail. 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 in the press release we issued yesterday. We delivered total revenues of $1,178 million, growing 12.5% as compared to the second quarter in the prior year. Income before income taxes increased by 20% and EBITDAC grew by 17.3%. Our EBITDAC margin was 35.7%, expanding by an impressive 150 basis points over the second quarter of 2023. The effective tax rate for the quarter was consistent with the prior year, and diluted net income per share increased by 17.7% to $0.93. Our weighted-average shares outstanding increased slightly as compared to last year, as we continue to prioritize paying down our floating rate debt. Lastly, our dividends per share paid increased by 13% as compared to the second quarter of last year. Overall, it was a very strong quarter. We're moving over to Slide 8. The retail segment grew total revenues 9.3% with organic growth of 7.3%. The difference between total revenues and organic revenue was driven by acquisition activity over the past year, with a partial offset due to lower contingent commissions of approximately $7 million in the second quarter of this year. EBITDAC grew slightly slower than total revenues due to lower contingent commissions and to a lesser extent, higher non-cash stock-based compensation. Excluding the impact of lower contingent commissions, the margins expanded nicely due to the leveraging of our expense base. We're on Slide 9. Programs had another strong quarter with total revenues increasing 15.8%, organic growth of 15.4%. Organic growth was positively impacted by approximately $5 million due to the finalization of a non-recurring growth bonus for one of our programs. The incremental growth in total revenues in excess of organic was driven primarily by increased contingent commissions, which resulted from our strong underwriting performance and a quiet hurricane season in 2023. For the quarter, we also recognized approximately $3 million related to the finalization of a contingent commission calculation for 2023. Our EBITDAC margin expanded by 220 basis points to 49.6%, driven by higher contingents and the leveraging of our expense base as well as the sale of certain claims processing businesses in the fourth quarter of 2023. We're over on Slide 10. Our wholesale brokerage segment delivered another great quarter with total revenues increasing 14.4% and organic growth of 11%. The incremental expansion in total revenues in excess of organic was driven by acquisitions completed over the last 12 months. Our EBITDAC margin increased by 240 basis points to 33.3%, primarily due to certain non-recurring costs in the prior year and leveraging our expense base. We've got a few other comments regarding our capital structure, cash generation, and outlook. In the second quarter, we issued $600 million of 10-year senior notes in preparation for the $500 million of notes that will mature in September of this year. We had excellent execution, and the market responded well to our credit profile and longer-term bias towards lower leverage. These new senior notes have a coupon rate of 5.65%. The remaining proceeds of $100 million were used to pay down a portion of an outstanding floating-rate term loan. Additionally, we paid down over $260 million of floating-rate debt in the quarter. For the first six months of this year, we had strong cash generation of over $370 million, even when taking into consideration the previously mentioned timing of paying federal taxes in the first quarter of this year related to 2023. Lastly, regarding margins for the full year, we had previously provided guidance indicating that we expected margins to be up slightly for the full year. With our strong financial performance for the first half of the year, we are now expecting 50 to 100 basis points of adjusted EBITDAC margin improvement for 2024. This guidance is dependent on the outcome of storm season, and as a result, this range may adjust up or down. With that, let me turn it back over to Powell for closing comments.

Thanks, Andy, for a great report. Let's start with the economy. Based on everything we're seeing, we think the economy will continue to grow in the second half of the year at a rate that is fairly similar to the first half. Additionally, we think inflation will further moderate as the year progresses, and our customers will continue to invest and hire new employees. Overall, we see this environment as a positive backdrop to our growth. From a rate perspective, it's worth splitting the conversation into admitted and E&S markets. For the admitted markets, we do not anticipate material changes from the first half of the year. The outliers will continue to be auto, work comp, casualty, and really large premium accounts, things like that. But for the E&S market, we expect continued pricing pressure or moderation in CAT property rates unless there is meaningful storm activity this summer. Casualty pricing will more than likely continue to move higher. On the M&A front, we feel good. We're talking with lots of companies. Our pipeline continues to be robust, and we're in a strong capital position. For Brown & Brown, our historical success has been rooted in our disciplined approach to building relationships, ensuring cultural alignment, and then delivering strong financial returns. I am very pleased at how our team is executing. We've spent significant effort to build great capabilities and develop an outstanding team. I'm also very proud that we developed the capabilities to serve customers of all sizes, both domestically and internationally. It's the Power of WE that is enabling us to win more net-new business. We're excited about the second half of the year and delivering another year of industry-leading financial metrics. Now with that, I'll turn it back over to Shannon to open it up for Q&A.

Our first question comes from Mark Hughes with Truist Securities. Your line is now open.

Yes, thank you. Good morning.

Good morning.

Any way you could break out the impact of property on organic growth this quarter? These issues of pricing as well as capacity and then policyholder retention, a lot of moving parts. And I'm just sort of curious how property played out from your perspective.

So good morning, Mark. And unfortunately, the answer is no. We don't do that, but I will give you a color around what you're talking about, and I appreciate your goal to get us to open up on that. But the way we look at it is this. Property in Q2 was under pressure, particularly as we got towards the 7/1 date. And so pretty much, I'm not going to say all, but most accounts were seeing rate decreases, except if you had really bad losses and even poor construction, we're getting some rate decreases. But - so if you've got a lot of losses, it might be flat or it might be up a little bit. So what I would tell you is this. This, what we're seeing today, is not surprising to us. We thought or at least I can say I thought, and I think Andy and I agree on this, we thought this was going to happen last year. And so there was - last year was again another tough rate year for customers. And so the rates in property are some of the highest they've been and forever. And so people like the return payoffs or the projected return payoffs. So they're coming in. And so depending on what the storm season does, that will dictate what continues to happen in pricing in Q3 and beyond.

Hi, Mark, good morning. It's Andy here. One of the things we mentioned during our prepared comments was just the impact of diversification, and we just suggest, think about our comment there, because property is pretty balanced in our overall book. And again, the second quarter is larger for the CAT property placements that are out there. But we've got more than just CAT property inside of our book from customer sizes, locations, industries, etc. So it's pretty balanced. And even, again, as we mentioned in the comments, if it goes up or down a little bit by an individual line, quite often there's something else that might be moving the other direction inside there.

Understood. And, Powell, you said casualty pricing you expect to continue to move higher. Is there anything you're seeing in the marketplace? There have been some reserve issues, anything that suggests real meaningful distress across the industry and therefore a change in underwriting approach or is this more of a continuation of the prior trend gradual move higher?

Well, I don't think there's one thing, Mark, to point to that says this is what triggered it to go up more. But let me just make a couple observations. Number one, the ability to get significant limits on an umbrella from one carrier is very low. So you might have gotten $25 million from a carrier before and now you might get $5 million. So you got to build up if you wanted $25 million with several carriers to get there. That's number one. Number two, please note, there are certain classes of business that are tougher than others. So if you ask me, which you haven't, what are two or three really tough classes of business from a casualty standpoint, I would point to habitational, so apartments. Two, I'd put anything with lots of liquor consumption, like a restaurant that 70% of its revenue is alcohol or a nightclub. And habitation - residential construction. Those would be three areas that continue to be under - but that does not mean that all casualty is not under pressure. A product manufacturer might be up 10%, 8%, 7%, 5%, whatever the case may be, but you may have a hab account that's up multiples of that. So it depends on where you are in the country, the class of business, a lot of stuff. And so I do think that what you're hearing from the carriers and from other brokers is coming through, which is, there continues to be seemingly more discipline around pricing pressure on casualty more so than any time in my career.

Very good. Thank you.

Thanks, Mark.

Thanks, Mark.

Thank you. Our next question comes from the line of Michael Zaremski with BMO. Your line is now open.

Hi, great. Good morning.

Good morning.

I guess three quarters double-digit last six, it's pretty impressive, but it kind of does make a trend. So I guess just along the lines of the marketplace discussion we've had so far. If there's upward pressure on levels of casualty, which are material, I would assume, within your portfolio, and then you gave us good color on property might decel if depending on CAT season. But is there anything else you want to call out that's kind of just unusual in the very near term that's really driving your excellent organic versus kind of the marketplace? And then you also mentioned that there's more shopping, so maybe more new business wins, which might not be sustainable. Anything else you want to call out that we should be thinking about on the back of our heads about that just might not be sustainable in the near-term?

Well, I don't know about - I'm not going to say it is or is not. We feel good about the amount of new business that we're writing and the net-new how that translates through into our business. I think the only other thing which is kind of the counter to that, and you didn't mention this, but I do believe in pockets of the country on larger accounts in the admitted market, there is pressure. And so that could be very dependent on what's happening in the Pacific Northwest in the United States might be very different than in the Southeast or in the Northeast or the Midwest. So I just think, Mike, remember, we're not a sexy business. We just execute well. And we try to deliver for our customers each and every day and we have a good rhythm. We are talking with lots of people, and when buyers of insurance, there is a fatigue level that's out there. So if you've got an increase for five years on your condo or your whatever auto fleet or whatever the case may be, sometimes you just say, listen, I need to talk to somebody else, and more times than not, hopefully, that means we're in the mix, and we're able to write a lot of new business as a result of that. That can work against you too. I mean, I'm not trying to say we're immune to that. We're not. But we just feel good about what - there's nothing, like there's no secret other than we think our culture is different. We talk a lot about it. We have teammates, we don't have employees. We have leaders, we don't have managers. And we have an ownership culture. And when 22% of the company is owned by teammates, we run the business differently. So we don't think quarter-to-quarter, we think one year, three years, five years, 10 years out, and it has served us really well. And so we're just executing really well.

Okay. Just obviously clearly great results, just seeing if I can get any other color. Now I guess lastly, I'm looking at the transcript. I think you said you're seeing more rate decline in open brokerage versus binding authority within the wholesale segment, if I understood that correctly. And if I am right, any further color there that's worth sharing?

Yes, remember, and let's just use open brokerage for a minute. Think of that as property. So we already talked about property. Casualty has got upward pressure and professional liability has got downward pressure. So two of the three in there have - that doesn't mean you can't grow, it just means that the benefits of a tailwind have shifted in two of the three to a headwind.

And then, Mike, keep in perspective that generally the second quarter is one of the heavier ones for property.

Yeah.

Okay. Thank you very much.

CAT property.

Let me clarify CAT property.

Thank you. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is now open.

Hi, thanks. Good morning. My first question is on the guidance, the 50 to 100 basis points of margin expansion. Does where you fall within that range just depend on if the wind blows or not and whether you see losses under your captive?

No, I think it's got a bunch of factors in it, Elyse, that drives in there. I think it depends upon the outlook for contingents, how do they move during the year, mix of businesses, how much each of them grow back and forth. And so I'm just trying to give a range as to kind of where things play out. To our comment depending upon what happens with storm season, because depending upon what occurs and the severity of it, that impacts the flood business. It impacts our captives inside of there. So if when one goes up, the other one probably goes down and vice versa. So there's balancing inside of all of it. It's just always hard to determine exactly where a storm may hit or not hit in insured properties.

Okay. But then I guess, right, so the 50 to 100 basis points, I mean, you guys were at 130 for the first half of the year. So that does imply contraction in the back half. Is it - another way of asking this, is it just captive losses as well as some conservatism around contingents that kind of - and then I know you had that one-off, right, some of that - you do get the - you had one-off revenue, right, within the captive from the reinsurance last year. I'm just trying to understand the moving pieces and what that implies for the margin in the back half of the year.

Yes. Keep in mind, which I think we've talked to pretty much everybody about this is, obviously, last year was a - there was calm storm season. And so our captives performed extremely well. When we go into each year, we think about our flood business as well as our captives and we have no idea what's going to happen during the year. So we use a lot of estimates going into it, and we'll look at averages over years. We do budget for storms, just it makes sense to do that. So that way if it doesn't happen, it's all upside, inside of there. So if you think about the third quarter and that's probably the higher likelihood in there is, yes, we would plan for storm claim activity. I guess, if it doesn't happen, that would be upside. And I think most everybody, at least Elyse including yourself, has that in the models for the third quarter on the margins coming backwards.

Okay, thanks. And then on programs, you guys have seen pretty consistent strong double-digit growth in that business. And I know you called off - you called out one growth initiative that modestly benefited the segment in the quarter. But as we think going forward, I know you guys don't like to guide on a segment level. So I'm not going to ask for a specific number, but how do you think about just overall just growth prospects of that business organically going forward?

So I think of that business kind of several ways. Number one, remember, you have CAT businesses in there, which are property-driven. So you could have rate pressure on those; you have those that are casualty-driven or professional liability-driven, which they could have a little rate pressure, but they could also basically come down to writing more new customers. So from a standpoint of what I think is, and what we've tried to do, and I think we're very consistent on this is historically up to this point, in the CAT businesses, there's been a discussion about availability of capacity. And right now, I don't think you're going to hear as much about availability of capacity; you're going to hear about pricing of that capacity. And so that's the only hesitancy that I would give to you, Elyse. I was expecting you to feel really good about our results and because we do, but I wanted to clarify that.

Yes. No, I mean, yes, I was pointing out the double-digit. That's helpful. That's helpful, Powell. Thanks for the color.

Thank you. Our next question comes from the line of Yaron Kinar with Jefferies. Your line is now open.

Thank you. Good morning. Maybe one clarification after the last set of questions. So in the guidance range for margins, even in the kind of best-case scenario that you're looking at here with, I guess, a more benign storm season, you're still modeling some storms into that, right?

Correct.

We are, yes.

Okay. And then, Powell, I am curious, I want to circle back to your comment about pricing pressure in casualty being kind of the worst in your career. I was just - I guess that caught me off-guard a little bit and not that I don't recognize that there is pricing pressure mounting in casualty, but just looking back to, say, the 2018 through '20 years, or even going back a bit further to maybe the early 2000s, late 1990s, you're seeing the current environment as even worse than that from a pricing perspective.

Yes. So let me go back, give you a - I started in the industry in 1990 at an insurance company. And I did that for several years and then worked for a short period of time in graduate school at a wholesale broker in New York. And so when I started seeing big casualties of all sizes and shapes and not just big in the early 90s to today, it has historically been under pressure. I'm making a broad statement. And there were classes of business that have struggled during that period of time; I think of habitational, and I think of residential construction in particular, but I'm talking about broadly speaking in casualty. So what I want - what I mean by that is, not so much the upward pressure on rates. I'm more specifically thinking about the discipline of the industry to basically continue to hold the line because usually, somebody is willing to flinch. And so I don't want to give you the impression that if you go out on a new, new piece of business that you can't keep rates flat in some instances. That is possible. But what I'm saying is, in my career, this is the broadest impact of pricing discipline in casualty that I recall. So I only have back to 1990.

Got it. No, that's a helpful clarification. If I could sneak one in - one last one in. In programs, are the programs that are leading the growth in the segment, are those the same or pretty consistent largely, or have you seen a shift in where the growth - the leaders of growth are coming from?

What I would say is that, in any business, many times, you're going to have a handful, two handfuls, three handfuls depending on the number of businesses you have that are going to be leaders. And so I would say as a general statement, those which have been growing over an extended period of time, and I'm not talking about one, two, three years. I'm talking about over a long period of time, tend to be those that are driving growth. And I think that would be very consistent within other firms as well. But, yes, that's how we've seen it.

Great. Thank you very much.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Rob Cox with Goldman Sachs. Your line is now open.

Hi, thanks. Hi. So I think maybe last year you guys had highlighted taking or just giving up some commission on the property business to kind of offset some of the rapid price increases your clients were seeing maybe particularly in the Southeast. So I'm curious, did that sort of flip back the other way this year with Brown maybe seeing a larger commission percentage and improved retention now that we're on the other side of those large increases?

Yes. I don't remember, I'm looking at Andy. I don't remember exactly saying that, but let me clarify the point. I want you to know that it is very competitive in property. And so what I mean by that is, we are always looking for what's in the best interest of the customer because if we don't, somebody else will. So what I mean by that is, there are instances in any market where we may have to give up some commission to get an account or something and maybe over time, we're able to build it back. But having said that, I would tell you that pricing is of paramount importance either on the way up or on the way down. And so I would lead you more towards, it's more about what is the absolute price as opposed to how we're compensated on it. And I believe that we're being compensated fairly. And I don't believe that there are - I don't feel like there's a compression that's going on in that from the downward pressure, but that's how I'd answer that, Rob.

Yes, Rob, in this market, I guess, with your comment, don't take it like we're out of the woods and like we're in a completely different level of the cycle. I mean, rates have been going up for five or six years. This is kind of the first part of the year when you start to see some declines, but you're not seeing 25s or 40s or anything like that. And it's not like we've been doing this for a few years. So customers right now are saying, in many cases, excellent, I can either get some more limits or great, I'll take it to my P&L just because they've taken so much pain over the last few years. So we're very early in a cycle, which we'll see what happens with storm season.

Okay, got it. I appreciate that. And maybe just as a follow-up on contingent commissions, are you already starting to see kind of some of this upward pressure on casualty loss trend in your contingent commissions? And would you expect that to potentially impact the remainder of 2024 or 2025?

I think we just continue to see loss activity. I'm not even talking just solely about casualty, but we see loss activity impacting profit-sharing and contingencies. So I think that it is a kind of a universal kind of across-the-board phenomenon; it's not one line of business.

Yes. I mean, Rob, the areas that have been under pressure for a while, which we've talked about in retail is auto. I don't think that takes anybody by surprise with the level of pricing that has been pushed through most auto books that are out there. So we don't see that abating anytime soon.

Okay. Thank you.

Thanks, Rob.

Thank you.

Thank you. Our next question comes from the line of Gregory Peters with Raymond James. Your line is now open.

Yes. Hi, good morning. This is Sid on for Greg. Just staying with the contingent commissions, I understand it's a smaller number, but just looking at the retail segment, they were down by over 50% year-over-year. So can you just remind us if there was some sort of one-time benefit to last year's number or anything that could bleed in the third or fourth quarter from that decline?

Yes, good morning, Sid. Andy here. We had some - a small amount of troops with the accruals that we made last year, but this is just as we talked about before, primarily impacts around auto as well as some of the other lines inside of there.

Okay. And then just as a follow-up on the investment income line item, should we just think of that as being interest rate dependent moving forward? And is there any seasonality we should consider there moving forward?

Yes. No real seasonality to it. It's more driven off of rates and then what's the available balances outstanding that have the ability to earn interest on those. You probably saw in there, we've got a higher level of cash at the end of June. That is where we've got about $500 million we're sitting on, which we'll use for paying down the notes that come up in September for maturity. So that drove some - a little bit of incremental interest income in the quarter.

All right. Thank you.

Yes, thank you.

Our next question comes from the line of Grace Carter with Bank of America. Your line is now open.

Hi, good morning.

Good morning.

I guess one quick follow-up on the contingents. Just given the dynamics across your different segments, would you expect any of the claims activity that impacted retail contingents in the quarter to bleed into the other segments going forward? Or do you think that just kind of the loss ratio impact there is pretty isolated to the retail segment?

Good morning, Grace. I guess from what we can see right now, we don't see a significant bleed over. Obviously, anything is possible at this stage, but feel like it's probably more isolated in retail at this stage.

Thank you. And I guess over time, you all talked about thinking about organic growth kind of in the mid-single-digit range over the long-term. Clearly, it's been quite above that here lately. I guess if you could just help us think about how internally you all are thinking about maybe the glide path back towards sort of historical levels and just how long do you think that it can sustain at these elevated levels that we've seen over the past several quarters and just sort of any sort of puts and takes that you're thinking about from that perspective? Thank you.

So good morning, Grace. And we don't give technically organic growth guidance. And, yes, you are correct in the range that we have stated, and we are not modifying over a long period of time our statements. I think that we continue to execute our plan really well right now. That's number one. Number two, from a standpoint of organic growth, the growth that we are seeing here domestically in our businesses is very similar to growth that we're seeing in our international businesses. So we're pleased with that as well. So what I would say is this: We're not changing our statements on those commentaries. I think that we're executing really well right now. We feel really good about our business. I will acknowledge that we get a little lift on some of that rate pressure, which was, let's say, property for a period of time. But I think that the future relative to organic growth is positive, very positive.

Thank you.

Thank you. Our next question comes from the line of Meyer Shields with Keefe, Bruyette & Woods. Your line is now open.

Thanks, and good morning. Powell, from a big-picture perspective, can you contrast maybe Brown & Brown's ability to win market share now with, I don't know, five years ago because you've been highlighting that as a driver of growth that's been really, really impressive. I'm wondering if this represents sort of a permanent change in growth prospects.

Yes, sure. Good morning, Meyer. This is how I would - let me sort of take you back slightly farther than that, let's go back 10 years. And in 10 years ago, we would - generally speaking, we were in a - we were a small and middle-market insurance broker, and we still have a lot of that business. But today, and we consciously, some of that consciously, some of it, it's better to be lucky than good, we have bought and built capabilities that enable us to be very successful in the upper-middle market and large accounts area. But let's just say upper-middle market for a moment, and specifically in employee benefits. So 10 years ago, were we going after a 5,000 and 10,000 life group? The answer is very limited. Today, we're going after those groups all the time. And so - and that is not just exclusive employee benefits. It could be on casualty, it could be a big property schedule, it could be D&O, it could be cyber, it could be surety, it could be any of these things. So - and then if you want to go back to your timeframe, specifically, in the last five years, we have further enhanced and embellished those capabilities, but we're working better together as an organization. So you put increased capabilities with better collaboration, knowing that our teammates are the most important thing at Brown & Brown to be able to deliver those custom - those custom solutions for our customers, it's pretty powerful. And we're having a lot of fun; we're working hard, but we're having a lot of fun too.

Okay, perfect. That's very helpful. And then a much smaller question, and I know we're all talking about contingent commissions. I guess my question is that commercial auto seems like it's been a terrible line of business forever. So I'm wondering why it's manifesting itself now in terms of contingent pressure as opposed to a year ago.

I don't think it's manifesting itself now as opposed to a year ago. I think it was embedded in a year ago, which I think Andy was just acknowledging that it's not just casualty. And again, the more unusual verdicts that you see out there that get headlines, that is - it is terrible, but it highlights some of that as it rolls through into the carriers' results, but it's not - that was going on last year and it was going on four years ago. So don't - let's not - let's be clear on that.

Thank you. Our last question comes from the line of Mike Ward with Citi. Your line is now open.

Thanks. Good morning. I was just wondering, following-up on some of the other questions, are you able to quantify at all the - just how much premium in programs is actually exposed to casualty or social inflation and how the underwriting margins have been trending?

No, we don't break that out, Mike, sorry.

Okay. And then on - maybe just on the captives. I was hoping you could refresh off on some of the economics with some of the changes with the quota-share captive recently. We were just - we were looking at the Q, I think you sold a stake in 1Q and then the written and earned premium spiked in 2Q. So just kind of curious if you have an outlook for that in the back half in terms of premiums and commissions or fee tailwinds.

So, Mike, I want to - we want to bring this in sort of for a landing. And here is the bottom line. We are very pleased in the performance of our captives. And we do not in any of our other businesses give individual guidance on the performance of an individual office or business. So what I would say in a broad-reaching statement would be the following. We like the business; we're not going to be giving guidance or talking about that particular business individually on a go-forward basis. We will continue to consider investments in that area. We may, may not do anymore. I don't like the terms never or always, but they will move up and down based on the marketplace. And so we're not going to get into the specifics about X or Y or whatever. And then they - whatever evaluation you do, that will be up to you. And we're not trying to be elusive, but what I'm saying is, we don't talk about the performance of one of our offices. And relative to the size of the business, this is just part of our company, and we feel really good about it. And it's in our programs area, and Chris and the team have done a great job with it. So it's a long-winded answer of saying no, but it's more of a clarification on how we want to approach it going forward. It's just part of the business, just like all the other businesses that we have, and maybe 500 plus locations. So that's how we'd answer it.

Got it. Understood. Maybe can I squeeze just a backward-looking non-guidance one, just give you opportunity to talk about the U.K. for a sec. I think you've said you - that has a similar growth profile as the U.S., but it looks like revenue accelerated in U.K. Just curious if you have been seeing any difference in the organic growth between the two.

So let me back up. Remember, we have had a lot of opportunities to acquire businesses there. And some of those businesses are standalone, and some of those are going into existing offices. That's one. Number two, as you know, we've bought the - most notably, the one I'm thinking of is Kentro Nexus, which is a program business. So we have more program business based in England today than before. Also, I would tell you that we have acquired in some of the instances capabilities that are in slightly larger account capabilities as well, not large account, but slightly larger than the SME. And so we feel really good about the opportunities there. Our story, and I said this earlier for a reason, anticipating if someone would ask that. But our story is one that is appealing to firms in England because we've been doing it for 85 years. We're consistent with what we say and we do. And people like the idea that we have teammates. So that's a - I talk about it - we are like a bunch of competitive athletic teams. And if you live in England, you either like football, which is soccer in America, but English football or Rugby. And so most everybody likes one or the other or both. And they like the ownership culture, they like the idea about leaders versus managers, and they like the idea that it's 85 years in business, and we're doing this forever. So what I would say is, there continues to be a lot of consolidation in that market, and we will have - play a role in that. But we feel good and the organic growth opportunities there, I would say, are on par with our business, equivalent businesses here in the States. That's exactly how I'd say it.

Thank you so much, Powell.

Yes, Mike, thank you.

Thank you. Our last question is from the line of Scott Heleniak with RBC Capital Markets. Your line is now open.

Yes, thanks. Good morning. Just wanted to talk - touch base on the employee benefits. Powell, I know you mentioned that just kind of high-level a minute ago, but anything you can talk about in terms of what you're seeing in terms of new business trends there versus the past few quarters or just anything you can share in terms of how that business is trending, anything you're seeing there to call out?

Well, remember, just as a clarification, Scott, we don't give specific line guidance. So I have to - I want to be careful on how I say this. So I am very pleased with our property and casualty and our employee benefits capabilities at all sizes and shapes, both domestically and overseas. So let's start with that. Number two, my comment earlier was directed at our capabilities to go upmarket and the amount of new business that we are writing. I don't want to give you the impression that new business is more limited towards just employee benefits because it's not. We're writing those same size accounts in property and casualty every day as well. But what I'm saying is, our capabilities there have probably grown more because we were further ahead in property-casualty before we started, if that makes sense. And so we're - we - if you had asked me seven, eight years ago, you have a friend that has a manufacturing operation and it's got 12,000 employees, we may or may not have had all the capabilities to do that. Today, we are very, very capable, whether it's 200 employees, 2,000 employees, 20,000 employees or more. And so it's a great expanded capability, and the people, a lot of the people that we are hiring like the way our system is built. So they might be leaving a firm where they've done large accounts, but it's more on a - this is how we do it. We sell one solution, and you're coming to a business where it's a custom solution based on any and every customer. So we're excited about that opportunity, but it's not limited to, it is in addition to what we're already doing in P&C, because we got the same thing going on in P&C.

Yes, got it. Makes sense. And just the only other question I had was just on the wholesale units that were strong again, organic up double-digits. Can you just talk about the flow and the trends you're seeing there in terms of any - is there any kind of newer lines you're seeing that are coming in that you weren't before? And is any of that property business going back to the admitted markets? Or is it just different E&S players that are kind of competing for that?

Yes. So first of all, we are seeing a lot of flow into the business. So not that we didn't before, but there's just a lot of activity, okay, that's the first thing. The second thing is the question you asked is absolutely the right question. And, yes, in limited instances, we are seeing that. And so what I mean by that is when the standard market comes back in, many times they are not riding the full limit of wind; they're writing a sub-limit, but it could be a big number. So for example, you could have a hotel, I'll make this up, in Texas, where it was - it's a superior construction, the whole deal, and it's $500 million or $600 million of value, and it used to be in the E&S market, and a standard market could conceivably come in and write that ground-up, but would provide a $100 million wind limit. That would be an example of when you start - and that is not happening all over the place and is only happening when the construction is really good. So far more accounts are moving out of the E&S market - I'm sorry, out of standard into E&S than from E&S back to standard. But there are instances that I'm aware of that we saw this quarter that would be very similar to that, maybe in different geographies, but the same concept. And so I think that there will be carriers that will be very strategic in the use of their CAT capacity. But remember, if you put up $100 million on a building, even if it's fire-resistive, that's still hitting against your CAT. So it's a lot different than it was framed, but I'm just saying, it's still - that's a big number to come out of. So they may have written the account three years ago or two years ago, and it went into E&S and it's come back. That's how I see it.

Yes. Okay. Makes sense. Appreciate it. Thanks for all the answers.

Yes, absolutely.

Thank you. I would now like to turn the call back over to Powell Brown for closing remarks.

Yes. Thank you very much, Shannon. Thank you all for joining us today. We're very pleased, as I said, about how we did for the quarter and the prospects going forward. Obviously, we watch very closely because there's a lot of really warm water in the Atlantic and the Gulf. So in the event a storm gets in there, it will probably supercharge it. But we don't know how that will play out until we talk to you again. But as it relates to, and kind of summarizing what Andy and I sort of said today, we feel really good about the business. We feel really good about the prospects and the opportunities we're talking to in the M&A space. We think that the market is changing as we've outlined today. I don't think the property market is going to crater in terms of pricing, but we could have continued downward pressure if there are no storms. And if there are storms, we could have all kinds of scenarios. We could have flattening, we could have upward pressure, we could have any of this stuff. So thank you all very much, and we look forward to talking to you next quarter. Good day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.