Overall, Q4 2023 earnings results from insurance brokers showed strong performances. Management teams were positive in meeting targets for Q1 2024 and further into 2024.
Quick look: Organic growth rates
Organic growth figures reported in Q4 2023 were generally comparable to those seen in Q3 2023. Most brokers reported organic growth rates in a range of 6%-16%.
- Marsh & McLennan Companies, Inc. (MMC) reported Q4 2023 organic growth of 7%, compared to 10% in Q3 2023.
- Brown & Brown, Inc. (BRO) posted organic growth of 7.7% in Q4 2023, below the 9.6% seen in Q3 2023.
- Arthur J. Gallagher & Co. (AJG): For AJG’s combined brokerage and risk management segments, AJG posted 8.1% organic growth in Q4 2023, compared to the firm’s 10.5% organic growth in Q3 2023.
- Willis Towers Watson Public Limited Company (WTW) posted 6% organic growth in Q4 2023, below its 9% organic growth in Q3 2023.
- AON plc. (AON) had organic revenue growth of 7% in Q4 2023, above the 6% in Q3 2023.
- BRP Group, Inc.’s (BRP) organic growth in Q4 2023 was 15%, below BRP’s Q3 2023 organic growth of 19%.
- Ryan Specialty Holdings, Inc. (RYAN) reported Q4 2023 organic growth of 16%, above Q3 2023’s organic growth of 14.7%.
Marsh & McLennan Companies, Inc. (NYSE: MMC)
MMC reported Q4 2023 adjusted earnings per share (EPS) of $1.68 on revenue of $5.6 billion, compared to consensus estimates of $1.63 adjusted EPS on $5.5 billion revenue. Marsh’s Q4 2023 organic growth was 7%, compared to 10% in Q3 2023 and 11% in Q2 2023. The firm’s full year organic growth was 9%.
John Doyle, President and CEO, said: “Our performance reflects execution of a well-defined strategy, which includes building a culture that attracts and retains top talent, strengthening our capabilities through organic and inorganic investment, positioning ourselves in segments and geographies with attractive growth and margin profiles, leveraging data, insights, and innovation to support clients and managing uncertainty and finding new opportunities and delivering the power of Marsh McLennan’s perspective to help clients thrive.”
Primary insurance rates increased for the 25th consecutive quarter, with the Marsh Global Insurance Index increasing 2% overall, compared to a 3% increase in Q3 2023. Property rates rose 6%, compared to 7% in Q3 2023, while casualty pricing continued to be up low single digits. The firm saw cyber insurance rates decreased modestly after several years of increases.
Read more about fourth quarter earnings for MMC.
Brown & Brown (NYSE: BRO)
BRO reported Q4 2023 adjusted earnings per share (EPS) of $0.58 on revenue of $1.03 billion, compared with consensus EPS of $0.53 on $985.5 million revenue. Organic growth was 7.7% in Q4 2023, below its 9.6% in Q3 2023. BRO had 10.2% organic growth for the full year 2023, boosted by new business and continued rate increases. The company noted that the overall economic sentiment of its clients as cautiously optimistic.
The company saw continued rate increases in the 5-10% range for most lines in the admitted markets. The firm noted that customers continued to reduce limits and look for ways to manage their premium increases. “Placement for cat property and excess liability continue to be difficult with rates for property up 10% to 30% and liability flat to up 10%,” said CEO, President, and Director J. Powell Brown. Personal lines in California, Texas, Louisiana, and Florida continued to be challenging, and policies are still moving into E&S and state sponsored plans.
Brown noted that “On the M&A front, the overall market will remain competitive, and we don’t expect any material changes in multiples. We have a very good pipeline and are talking with many companies.” During Q4 2023, BRO completed 13 acquisitions with estimated annual revenues of $109 million. For the full year 2023, BRO made 33 acquisitions, with estimated annual revenues of $162 million.
Read more about fourth quarter earnings for BRO.
Arthur J. Gallagher & Co. (NYSE: AJG)
AJG reported Q4 2023 adjusted earnings per share (EPS) of $1.85 on $2.39 billion revenue, compared to consensus $1.85 adjusted EPS on $2.41 billion revenue. For their combined brokerage and risk management segments, AJG posted 8.1% organic growth, slightly below the firm’s Q3 2023 organic growth of 10.5%. Adjusted EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and the Change in estimated acquisition earnout payables) for these segments was 30.1%, up 69 basis points over Q4 2022.
For the brokerage segment, organic growth was 7.2% and adjusted EBITDAC growth was 21%, with an expansion of 48 basis points. During Q4 2023, AJG completed 14 mergers, totaling $410 million of estimated annualized revenue.
AJG is following an active Q4 2023 for M&A activity with a strong start to 2024, with four brokerage mergers closed in January for about $30 million of annualized revenue. AJG also had approximately 40 term sheets signed or being prepared, representing around $350 million of annualized revenue. Chairman & CEO J. Patrick Gallagher noted, “As we sit here today, we are very well positioned. 2023 was a great new business year, and I believe we will continue to win new clients while retaining our existing customers.”
Read more about fourth quarter earnings for AJG.
Willis Towers Watson Public Limited Company (NASDAQ: WTW)
WTW reported Q4 2023 adjusted diluted earnings per share (EPS) of $7.44 on revenue of $2.91 billion, compared to consensus estimates of $7.06 adjusted diluted EPS on $2.91 billion revenue. WTW posted 6% organic growth in Q4 2023, below the 9% organic growth in Q3 2023. The full year 2023 organic growth rate was 8%. The company noted that its specialty businesses continue to experience high growth, with improved client retention and new business wins. Its focus on specialization in its Risk & Broking segment also continued to be a key driver of organic growth.
WTW noted that specialization is still a primary strategic focus in Risk & Broking. “Our approach to specialization is tailored to each geography in which we operate. In 2023, we built out 12 industry verticals in North America. That process is now complete, with colleagues, processes and infrastructure supporting that alignment,” said WTW CEO & Director Carl A. Hess.
In 2024, WTW expects mid-single-digit organic growth and revenue goal of $9.9 billion or more. WTW continues to see its 2024 adjusted operating margin in the 22.5% to 23.5% range, and adjusted EPS of $15.40 to $17. Free cash flow margin is also expected to expand.
Read more about fourth quarter earnings for WTW.
AON plc. (NYSE: AON)
AON reported Q4 2023 adjusted earnings per share (EPS) of $3.89 on $3.38 billion revenue, compared to consensus estimates of $4.06 adjusted EPS on $3.36 billion revenue. Organic revenue growth was 7% in Q4 2023, compared to 6% in Q3 2023. Full year 2023 organic growth was also 7%, with full year double-digit growth in Reinsurance Solutions and Health Solutions. AON noted that the strength of its Aon United strategy and Aon Business Services platform continued to bolster results.
AON CEO & Executive Director Gregory Clarence Case spoke about how the company is set to have a strong 2024: “We’re executing our 3×3 plan to leverage our Risk Capital and Human Capital structuring capability, embed the Aon Client Leadership model across the firm and utilize Aon Business Services to set a new standard of innovation and client service.” The firm also announced in Q4 2023 its agreement to acquire NFP, a premier operating platform in the middle market segment.
In line with the Q3 2023 outlook, AON’s guidance is for mid-single digit or greater organic revenue growth in 2024 and over the long-term. The firm also expects adjusted operating margin expansion and double-digit free cash flow growth in 2024 and beyond.
Read more about fourth quarter earnings for AON.
BRP Group, Inc. (NASDAQ: BRP)
BRP reported Q4 2023 adjusted earnings per share (EPS) of $0.14 on revenue of $284.6 million, compared to consensus EPS of $0.11 on $280.54 million revenue. BRP’s organic growth in Q4 2023 was 15%, slightly lower than Q3 2023’s organic revenue growth of 19%. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for Q4 2023 increased 16% to $45.6 million compared to $39.2 million in the prior year period. For the full year 2023, BRP had organic growth of 19%.
BRP executed a definitive agreement for the sale of their wholesale brokerage platform Connected Risk Solutions to Amwins. The transaction was expected to close on March 1, 2024, generating cash proceeds of approximately $59 million. In addition, this transaction is expected to be neutral to 2024 adjusted EPS and accretive to both 2024 organic growth and adjusted EBITDA margin. Otherwise, BRP does not expect any M&A activity in 2024. BRP CEO & Director Trevor L. Baldwin spoke of BRP’s future M&A activity: “And after we pay the last of the large earnouts in the first quarter of 2025, I think we would expect that M&A becomes a more prevalent part of our story again. But importantly, we’ll be more episodic in nature than it was in the first few years of our life as a public company.”
Trevor Baldwin also shared, “In summary, we are proud of the strong results we delivered in 2023. We are executing daily on numerous strategies to drive continued industry-leading organic growth, expanding margin and growth of our free cash flow, all while building on our unique culture and status as a destination for our industry’s most talented professionals.”
Read more about fourth quarter earnings for BRP.
Ryan Specialty Holdings, Inc. (NYSE: RYAN)
RYAN reported Q4 2023 adjusted earnings per share (EPS) of $0.35 on revenue of $533 million, compared to consensus estimates of $0.34 adjusted EPS on $522.97 million. RYAN reported Q4 2023 organic growth of 16%, above Q3 2023’s organic growth of 14.7%. Full year 2023 organic growth was 15%. The growth was driven by ongoing “tailwinds in much of the E&S market, strong renewal retention and the ability to win substantial amounts of new business.”
RYAN Chairman & CEO Patrick G. Ryan spoke of secular growth drivers in the E&S space, stating: “We believe the E&S market will keep growing and consistently outpace growth in the admitted market, overshadowing any cyclical shifts in certain lines with respect to submission flow and pricing. This is further aided by changes in distribution trends, with a growing number of wholesale-only E&S carriers in the marketplace.”
M&A remains a top priority for RYAN, and its pipeline remains robust, with both tuck-ins and potential large deals. The firm expects to have double-digit organic growth in 2024, driven by organic and acquisition strategies, as well as secular growth factors. While RAYN is seeing hard market pricing conditions continuing in 2024 in most of its lines, the company expects that the flow of business into the non-admitted market to be a greater driver of growth than rate.
Read more about fourth quarter earnings for RYAN.
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