Brown & Brown, Inc.

Thanks, Kevin. Good morning, everyone, and welcome to our first quarter earnings call.

Once again, our team delivered strong top and bottom line results. I'll provide some high-level comments regarding this performance, along with updates on -- in the insurance market and the M&A landscape.

Andy will then discuss our financial performance in more detail. And lastly, I'll wrap up with some closing thoughts before we open it up to Q&A.

So now let's get into the results. I'm on Slide 4.

For the first quarter, we delivered revenues of $1.4 billion, growing 11.6% in total and 6.5% organically as compared to the same period in the prior year. Our adjusted EBITDAC margin improved over 100 basis points to 38.1% and our adjusted earnings per share grew over 13% to $1.29.

On the M&A front, we completed 13 acquisitions with estimated annual revenues of $36 million. This consistently strong performance is a direct result of the dedication of our team of nearly 18,000 teammates.

I'm on Slide 5. Main topic for the quarter was uncertainty related to tariffs, inflation and interest rates and how they might impact economic expansion.

Overall, we did not see buyers of insurance materially changed their outlook, but we did see some business leaders shift to being more cautious. Generally, companies are still hiring and investing in their businesses.

However, in certain cases, you're seeing some new projects put on hold for a few months due to these uncertainties. Presently, we would say the levels of investment in people and assets are fairly consistent with the past few quarters.

We view this as a positive. Overall, the economies in which we operate are relatively stable and business owners remain optimistic, but have a tempered view regarding the level of growth over the coming quarters.

From an insurance pricing standpoint, rate increases from most lines continued and were fairly consistent with the prior few quarters. However, they're moderating downwards slightly as compared to last year.

The outliers continue to be auto and casualty that are increasing and CAT property continued to soften during the quarter. We'll get into more detail about the CAT property in a couple of minutes.

Pricing for U.S. employee benefits in the first quarter was similar to prior quarters as medical and pharmacy costs remain up 7% to 9%.

The outlier continues to be pharmacy, which is growing faster than medical. This ongoing upward pressure and the complexity of health care continue to drive strong demand for our employee benefits consulting businesses.

Rates in the admitted P&C market moderated slightly as compared to last quarter and were up 2% to 7% from most lines versus the prior year. The downward trend for workers' compensation remain in most states and they were flat to down 5%.

For the first quarter, rate increases for non-CAT property were in the range of flat to up 5%, which is similar to the prior few quarters. For casualty, we continue to see rate increases for primary and excess layers.

Consistent with the last few quarters, rates for excess casualty increased in the range of 5 to -- sorry, 5% to 10%. Placing higher limits or layers continues to be very challenging, both from a pricing perspective and the availability of limits.

For professional liability, rates were flat to up 5% as compared to last year. Shifting to the E&S property market.

As we entered the first quarter, we anticipated rates for CAT property would decline 10% to 20%. With the availability of capital rates during the quarter declined a bit faster and were down 10% to 25%, and we saw outliers based on the quality of construction, claims experience and new versus renewal business.

In some cases, rates were down in excess of 25%. With the decline in rates, some buyers chose to increase their limits or modify deductibles while others realize the savings.

These savings also enabled some companies to increase their limits on other lines of coverage. As we've mentioned in the past, buyers will manage their overall insurance spend and focus on the combination of rates, limits and deductibles.

On the M&A front, we had another good quarter and acquired 13 great companies with $36 million of annual revenue. From an overall market perspective, competition for high-quality businesses remain.

Let's go to Slide 6 and transition to the performance of our 3 segments. Retail delivered 4.1% organic growth, which was in line with our expectations and was driven by good performance in all lines of business.

As a reminder, we expected the first quarter to be lower than the others this year due to the shifting of renewal dates and timing of certain nonrecurring businesses. Programs delivered another good quarter with organic growth of 13.6%.

This performance was driven by a number of our Programs with good new business, retention and exposure unit expansion as well as claims revenue associated with the '24 hurricanes. Our CAT Programs, our CAT Property Programs grew for the quarter slightly even with the impact from rate decreases.

Wholesale brokerage had a strong quarter with organic revenue growth of 6.7%. This performance was driven by growth across all lines through a combination of net new business and exposure unit increases with the growth partially offset by the continued downward pressure on open brokerage CAT property rates.

Now, I'll turn it over to Andy to give more details regarding our financial results.

Thanks, Powell. Good morning, everybody.

I'm going to 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're 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're over on Slide #7.

We delivered total revenues of $1.404 billion, growing 11.6% as compared to the first quarter of 2024. Income before income taxes increased by 17.4% and EBITDAC grew by 14.8%.

Our EBITDAC margin was 38.1%, expanding by 110 basis points over the first quarter of the prior year. The higher growth in income before income taxes was due to lower interest expense associated with debt repayments.

Our effective tax rate for the quarter increased slightly to 21.8% versus 19.5% in the first quarter of the prior year. The increased tax rate was driven by having less benefit associated with vesting of restricted stock awards as compared to the first quarter of last year.

As a reminder, most of our restricted shares vest in the first quarter, so we can have variations in our quarterly tax rate depending on the number of shares that vest and the change in share price. Diluted net income per share increased 13.2% to $1.29.

Our weighted average shares outstanding increased slightly compared to last year, and we continue to prioritize paying down our floating rate debt as this has a higher impact on the growth of earnings per share. Lastly, our dividends paid per share increased by 15.4% as compared to the first quarter of 2024.

Overall, we are very pleased with the performance for the first quarter. We're going to move over to Slide #8.

The Retail segment grew total revenues 12.5% with organic growth of 4.1%. The difference between total revenues and organic revenue were driven substantially by acquisition activity over the past year.

Our EBITDAC margin expanded by 120 basis points to 37.3% due to managing our expenses and the positive impact of the seasonality of revenue and profit for the Quintes acquisition, both were partially offset by higher noncash stock-based compensation. As we mentioned previously, approximately 60% of the revenues for Quintes are recognized in the first quarter.

Therefore, we have higher margins in the first quarter and lower margins than the others. This is very similar to the profile for employee benefits in the United States.

From a full year perspective, we continue to anticipate Quintes to perform within the revenue and EBITDAC ranges that we previously communicated. We're on Slide #9.

Programs had another strong quarter with total revenues increasing 10.1% and organic growth of 13.6%. In comparison to prior year, our profit sharing contingent commissions decreased about $6 million due to positive adjustments recorded in Q1 of '24.

Lastly, we recognized approximately $12 million of hurricane claims processing revenue, which is in line with our expectations. Our EBITDAC margin expanded by 220 basis points to 44.5%, primarily driven by strong organic revenue growth and managing our expenses.

We're moving over to Slide #10. Our Wholesale Brokerage segment had another strong quarter with total revenues increasing 12% and organic growth of 6.7%.

The incremental expansion in total revenues in excess of organic was driven by acquisitions completed in the last 12 months and higher contingent commissions. Our EBITDAC margin decreased by 30 basis points to 32.1% due to higher noncash stock-based compensation and the impact of foreign exchange.

Isolating these changes, the underlying margin increase year-over-year due to managing our expenses and higher profit sharing contingent commissions. Lastly, from a cash perspective, we generated approximately $215 million of cash flow from operations, which was an increase of $200 million over the first quarter of 2024.

This improvement was due to incremental taxes of approximately $120 million paid in the first quarter of 2024, which were deferred from 2023. In addition, we continue to manage our working capital and expand our margins during the quarter.

As previously noted, we deferred the payment of approximately $90 million of federal income taxes for the third and fourth quarters of '24 related to IRS tax relief associated with the prior year hurricanes. These taxes will be paid in the second quarter of this year and will impact our cash flow conversion.

With that, let me turn it back over to Powell for closing comments.

Thanks, Andy. Great report.

From an economic standpoint, we believe the main driver of expansion over the coming quarters will be the outcome of inflation, tariffs and changes in interest rates. Leaders, as you know, can generally deal with most changes.

But until there's a resolution regarding the extent and breadth of tariffs and inflation, companies will more than likely have a cautious bias. This does not mean that we think leaders have a negative outlook.

Rather, they may change the level of investment over the coming quarters with some quarters higher or lower than prior quarters. We continue to believe there's a positive backdrop for economic expansion, and growth is moderating back to more traditional levels.

From a pricing standpoint, other than CAT property, we do not expect any material changes in rates for admitted and non-admitted lines. For CAT property, we believe rates will continue to decrease in the second quarter and could be down in the range of 10% to 30% due to the availability of capital.

One of the topics that still needs to be resolved is the impact of the wildfires on the standard market for property coverage in California. On the M&A front, we continue to feel good.

We have a strong pipeline, both domestically and internationally and are building relationships with many firms. As we've spoken about, cultural alignment is the most critical factor to the success of acquisitions at Brown & Brown.

We have a strong balance sheet, outstanding cash flow conversion and access to additional capital when we need it. We're in a great position as a company.

Our team continues to execute at a high level. Each of our divisions are performing well and have good momentum heading into the second quarter.

There will probably be some ups and downs in the economic outlook, but with our broad diversification across geographies, customer size, lines of coverage and capabilities, we're well positioned to capture the opportunities that are on the horizon. As we've said before, we are a solutions provider and during times of volatility being a great partner for our customers is critical to helping them manage uncertainty.

We believe the second quarter will be a good one for the Brown & Brown team. With that, let's turn it back to Kevin and open it up for Q&A.

Andy, the Quintes impact on the Retail margin and this timing shift on organic also in Retail, any specific numbers you might be able to share with us about what the effect was in the first quarter and then kind of what that means for the balance of the year?

Mark, if you if you utilize the guidance that we provided before on Quintes, about 60% of those revenues came in the first quarter. So again, think about the margin again has a pretty similar profile of what employee benefits does in the first quarter.

So it's just naturally going to be higher. So that will serve as a bit of a drag in the out quarters for Retail.

But on a full year basis, it will work out. It should be right in line with where we were thinking originally on the Quintes acquisition that's in there.

And then the other piece you had asked about was just kind of the shifting in renewals and some of the onetime business. As we mentioned before, we anticipated that the first quarter would be about 1% below the other quarters.

The first quarter for Retail was pretty much right on exactly what we thought it was going to be. So we continue to have good confidence in the out quarters for the year, kind of tied back to the comments that we made earlier about just economic backdrop and where buyers are right now.

So we feel really good about the business.

Very good. And then, what do you anticipate for earned premium in the captives this year?

It will probably be up a little bit over last year on it, Mark. The piece is, I think you picked up on it in your research notes, and we talked about this in a couple of previous calls, is we're writing up to a specific amount of premium and that's our way of capitating the risk profile inside of them.

And we pretty much hit that in the first quarter. We've been kind of climbing that over the past few years.

So we would not anticipate much incremental organic growth in the following quarters in the captives. Now that might move around a little bit dependent upon what happens with CAT property pricing back and forth.

But wouldn't anticipate anything material plus or minus versus last year, second through the fourth quarter.

Thanks for all the color on kind of property rates and especially CAT exposed, and there's plenty of capacity there. I guess, just is it -- it looks like if we try to dissect some of the programs, organic growth, there does seem to be a downwards impact, which could be coming from CAT property pricing being down?

Is it as we think about the rest of the year or just is it fair to kind of put in a bit of headwind from downwards property pricing, especially I think Brown is a bit of overweight Florida versus peers?

Mike, it's Andy here. Let's see if we can kind of put this into a few buckets because we wouldn't want anybody to think that the downward trend is all associated with CAT property.

That would not be a good or a proper conclusion. Remember the things that we've talked about over kind of the past year that's helped fuel the growth in Programs.

We've talked about our lender-placed business has been performing really well with winning new business as well as we've had customers acquiring portfolios. And we've had just -- we've had outstanding growth over the past few years, still expecting good growth this year, but not probably at the same level.

Mark asked earlier about the captives, and so I think we've mentioned there, again, that has helped fuel organic growth that will start to level itself out in '25 for the business. And then CAT property is a component.

It did grow during the quarter for us, not at the same levels as we've seen over the past few years, but we did still have good growth in there through the submission and everything that we've received in the business. And then the other piece to keep in mind in the back end of the year is, we're not sure what's going to happen with the hurricane season.

So remember we had a significant amount of claims revenue in the fourth quarter. We do not budget for kind of known storms.

We just use kind of a 10-year average. So depending upon what happens, and if it's a relatively calm season in the back end of the year, I think it's probably realistically at least we would think realistic that the organic growth in the fourth quarter Programs could be around 0 because of the very tough comp with all the flood claim revenue.

Okay.

Okay. Thanks, Andy, for unpacking that.

My follow-up would be on probably the Retail segment. If I think about the commentary on employee benefits and some upwards pressure on inflation there.

Is that -- did that come through in the Retail organic this quarter? And maybe you can size up how much seasonality there is, I think, in 1Q versus the rest of the year in terms of mix of benefits being higher, I believe, in 1Q?

So remember, that's a revenue recognition issue, Mike. And so it's sort of front-loaded that Andy sort of referred to.

So when I say that, that makes the assumption if your thought process that all of those accounts are either on commission, not a per head per month or a fee. So most of our business is on commission, but I just want to clarify that, that in some of the smaller business or fully insured, it's going to be -- there's going to be on a per head per month that we get paid.

And on our larger business, many times, those are on fees. As it relates to the organic growth in Retail, we were very pleased with the organic growth in Retail, particularly in light of what we said at the end of Q4 and in our remarks about some shifting of some things and some nonrecurring revenue.

So -- and we anticipate it to be a little bit higher later in the year. And so we feel good about it and continue to feel good about it.

Powell, in your closing comments, you talked about growth returning to a more normal level. And I'm reminded of a comment you used to make about the impact or weighting of economic growth versus the impact from rate increases.

And I think in the last couple of years, you seem to -- and I don't want to put words in your mouth, but you seem to indicate that you're getting a little bit heavier weighting from rate increases versus economic versus the traditional averages. Maybe you can update us because in the slide presentation, there's a couple of slides there where you talk about property CAT being down affecting -- having an offset on organic.

And you talk about the other rate environment. So just can you provide us some updated perspective on how you're thinking about that?

Sure. So first of all, what Greg is referring to is historically, I would say, that our business is 2/3 to 3 quarters exposure unit and the remaining would be rate.

That's how I've always sort of said that. And we've alluded to the fact that with the transition, particularly in CAT property, but it could be in some heavy casualty lines into unusual umbrellas and other things.

It has gone up or had a little bit higher impact on rate in the growth. So that's the first thing.

The second thing that I'd like to sort of clarify for everybody is I find it very interesting how you all are sort of surprised by the rate decreases in CAT property. I would have said I thought this was going to happen a year ago.

And so CAT property historically goes up faster than you anticipate, and it comes down faster than you anticipate. And so it's all about the availability of limits out there, whether it be through a traditional insurance company or through an MGA or some combination thereof.

So I think from a standpoint of our Retail business, but it affects the whole business, we are writing a lot of new business, Greg. And our goal is to get the best program, that's the most competitive program with the most comprehensive price -- comprehensive coverage for our customers.

And so today, I do believe that what -- if you believe what I just said, which I do, is that it would go back more closer to the 2/3, 1/3 or 3 quarters, 1 quarter, but I usually use 2/3, 1/3. And again, as I said, I believe that if you talk to people, just the person on the street, they have a little bit more negative view of the economy than people that run and own businesses.

I believe that depending on the industry that you're in, depending on your supply chain, some of these other things, your view is slightly different and maybe more moderated. So we feel good about Retail.

And as I said, that's a long-winded answer on 2/3, 1/3.

Greg, the other thing to keep in mind, and we've mentioned this a bunch over the past few years is our diversification. And again, if you go way back in history, yes, we were probably more weighted to Florida and potential CAT property.

But with the industries that we serve, the lines of coverage, geographies across the business. The CAT property can have a movement maybe on offices in certain locations.

But the ability to have a material impact on our numbers across the board is much less than what it was years ago. And that's all been done with kind of purpose for the strategy on how we diversify the organization.

Great. The moderators instruction said one question, but everyone seems to be asking a follow-up.

So I just slip in my follow-up, which would be, can you talk about the outlook for the flood business, the federal government -- the federal government program and FEMA, it's unclear. It sits inside of FEMA.

So it's unclear what's going to happen with the flood program. And I'm just curious about your perspectives given all the changing dynamics happening in Washington, D.C.

So Greg, let's look at historical perspective of flood and then put that kind of an overlay the current environment. So as you probably know, the flood program has not been reauthorized for an extended period of time, meaning something like a 5-year traditional reauthorization or something in a long time.

So basically, they have been reauthorizing for shorter periods of time because they can't get the full reauthorization through. And so I use that as a backdrop to say this.

We believe that the flood program is a critical program in the United States for homeowners. And I believe the government and everything that we hear would lead us to feel that way.

That said, I think the likelihood of having a longer-term reauthorization in the next year to several years is probably lower because it just seems to be getting kicked down -- kick the can down the road. And that's what our team says, and we're very close to the people involved in Washington.

But as you know, we write about 1/3 of all the right-run flood premiums in the United States. And so that's kind of how we feel about it.

I do want to focus on CAT, and I just have a more general question about the state of Florida. It seems like after 837, a lot of the lawyers lost a lot of revenue and a lot of different kinds of risk.

Is the cost of risk going down in the state of Florida broadly? And what impact should we have on Florida pricing broadly compared to the national economy over the next couple of years?

Should Florida growth be lower than the rest of the country?

Okay. So interesting question, Josh.

First of all, is the cost of risk going down in the state of Florida. And I would -- I have to temper this statement.

If you are on CAT property and it went really high, your cost of risk is coming down, okay? I'm talking about the rate on that.

However, the overall cost of risk in the sense that what a person is paying to ensure the similar property, i.e., let's say, their home, is actually going up still because you have increased cost of construction. So you have insurance to value and insurance -- increased cost of construction issues.

So somebody's home might have been, let's say, on a replacement cost at, I'll make this up, $200 a square foot. And in the event that there is a loss, it will cost them $300 a square foot to replace that house in like kind or quality.

So that's number one. Number two, if you think about it, particularly in certain areas of the state is more pronounced.

But if you go to Southeast Florida, there are a number of uninsured motorists on the highways. And so the cost of liability insurance and physical damage for the auto, whether it's personal or commercial, continues to go up, and it is highlighted by these very large awards that the plaintiffs' bar usually highlights, but that's -- there are a lot of fairly large awards.

And so you have to keep that in mind. As it relates to growth in the state of Florida, what's happening, in my opinion, is this.

Florida used to be a very inexpensive place to live relatively speaking, other than barring South Florida, meaning Southwest and Southeast Florida. Today, there has been an escalation in home prices and land values.

So it's not as inexpensive as it once was. And so it's a transitionary market, and there are more and more people that are coming here that are fleeing high tax states, like the state that you have in, and they're coming here and they think it's wonderful.

So we believe that there is going to be continued growth in the economy in Florida in the near, intermediate and long term.

And what about the price of liability, court costs, legal fees on the casualty side of the coin. Is there any change going on there?

Yes. So the answer to the question is, I think -- if -- we'll make it very simple, I think that even with the tort reform that has occurred and that seems to point in the right direction that is overshadowed by the size and frequency of larger settlements.

And so it's a very difficult push-pull environment. And I would say that there's more push on rates up than pull on rates down due to reform.

I was hoping that you could clarify. I think, Andy, you mentioned that there's -- that without flood revenues in the fourth quarter, organic would be 0.

Is that if there are no flood revenues? Or is that at the 10-year average?

No. So let's see -- again, we'll reclarify on that one is if there is minimal flood claim revenue in the fourth quarter, then the organic is probably closer to 0.

Okay. But that's worse than what you're budgeting using the average?

That is -- yes, if you pull it down on the average, it will be too far off there if you use a 10-year average.

Okay. That's very helpful.

The second question with regard to CAT property, I guess the key question I'm hearing a lot is, are we seeing signs of any standard insurers or admitted insurers coming back in sort of cutting out the Wholesale Brokerage entirely for a CAT property?

Well, generally speaking, the answer is no. And so here's what I would -- I'll give you an example.

If you have a property in Miami, and if it's -- I'm going to flip it around, Meyer, so you can see this example. If it's in a standard market, and the rate is, let's say $0.60, I just made that up.

And the standard market wants a 10% increase, a 5% to 10% increase on that property, the lowest rate they might get on that same property in the E&S market is $1. Having said that, very few standard markets would write it -- they've grandfathered that property in.

So what I'm saying is if you have a -- if it's at $1 and they don't want to write it in the standard market, they're not coming back in at a $1. So they have -- there are some old grandfathered standard market business that permeates in Southeast Florida, in particular, that's not exclusively, it could be other places.

But the answer is no, we're not seeing that right yet.

This is Charlie, on for Andrew. I just have one question, and it was on lender-placed business, which I know you guys touched on a little bit earlier in the call, but -- was there any incremental either benefit or headwind from lender-placed insurance in 1Q '25 within programs.

I think previously, you guys may have mentioned that there was going to be like more of a return to a regular seasonal cadence there. But I guess any color would be helpful.

Charlie, it's Andy here. No, there's no headwinds year-over-year to the business.

It just didn't grow at the same pace that it did a year ago. And just we want to make sure we clarify the growth that we're seeing in the business is due to us winning new accounts or customers buying portfolios.

The actual lender-placed ratio is not materially changing, which that's always to us, a good indicator to the health of the economy. That means people are still in a good financial position that they're able to pay their insurance.

So just want to make sure that we clarify that.

Okay. Yes.

And then I guess, just on the seasonality there, just no material changes, I guess, it sounds like.

That one -- that business doesn't really have a seasonality to it, Charlie just because they're -- again, it primarily is placing coverage on homeowners, and that's just kind of throughout the entire year. Where you'll get different seasonality is when we bring on a new account is you'll have a bump of multiple months of revenue through a transition when you got to get letters back out to the homeowners.

So that's the one that really causes -- I wouldn't call that seasonality, that's just you're onboarding a new account, you'll pick up an extra 2 or 3 months of revenue. And then when you make a lap, you lose it on comparability, but that's just kind of how the business works in there.

A couple here for you. First one, I know there's some legislation actually in Florida trying to turn back some of the reforms that happened.

I'm not sure if you got any updates on where that is. And do you think that may reverse the course of kind of the pricing pressure that we're seeing right now?

The answer to the question is we know that there is not a lot of interest in the state Senate or in the governor's office to have proposed legislation as written implemented.

Good. That's helpful.

And then second question, I was just wondering, MGA business. I'm just curious, right now, it appears that carriers have a lot of demand and appetite for MGA-type business.

I'm curious what your outlook is for the MGA business. Do you think that is continuing here for a while?

Or do you think maybe we start to see some of that slow at some point from a carrier appetite perspective, particularly with some of the big rate reductions you're seeing in, call it, E&S property and stuff.

Yes. So I think let's back up, Brad, and talk about why there is that interest in the MGA business.

So I think it's a combination of things. Number one, the carriers believe it's a way for them to get large chunks of premium potentially if someone moves a program to them.

So there's an appeal of that in terms of trying to grow their business. That's number one.

Number two, the quality of the underwriting in a number of the MGAs is quite good and so the days, if you go back 15 years ago, the carriers view the underwriting or MGA space as a little bit like the Wild West, and there were cowboys and maybe not as detailed or the data was not as good. And today, the carriers don't support cowboys.

They actually cut them off. And so you have to have a system, a process that works.

You've got to show good results over time. It's more of a true partnership.

So do I think there will be a decreased interest in MGAs from carriers in the near to intermediate term? No, I think it will be the contrary.

As it relates to pressure on rates depending on the line of business, I think that they will mirror the market and in some instances, be more pronounced in the market. And it just depends because if you've got a casualty program for liability on law enforcement officials, that could have upward pressure versus CAT property versus an automobile program versus contractor program.

So it's very program-specific. And as it relates to us, we feel really good about our MGA, MGU business because it's so diversified.

And people recognize -- go ahead. sorry, Brad.

No, that was -- keep going, sorry.

No. I mean I just think the carriers recognize quality, and they want to associate with people that can actually bring them quality business and have an appropriate partnership over a long period of time.

My first question is just on the margin outlook. I know last year, you guys -- last quarter, sorry, you guys said you were looking for margins to be roughly flat in '25 versus '24.

I was just hoping you can comment where -- how Q1 shook out relative to expectations. I know there were some pushes and pulls with the segments with the Quintes seasonality, et cetera.

And -- and what's your current view for your full year margin and how that might have changed over the last 3 months?

Elyse, it hasn't changed. It's exactly what we described in the Q4 call.

It would be a little bit higher in Q1, which was met our expectations, and you have the expense more loaded in Q2, 3 and 4 in Quintes, as an example. But we don't have a modification.

And quite honestly, we are very pleased with our margin. And so yes, we feel good about it.

And I hope you do, actually.

Yes. And then my second question is on just Retail, right?

You guys had guided to the Q1 being about 1% lower than the full year, which, based on the prepared commentary, it sounds like it was in line with expectations. Obviously, as you pointed out, there's just some uncertainty with tariffs, et cetera, right now.

Just based on how you see everything developing, it sounds like you guys still think right, the full year could be around 5%, maybe a little bit above, given what you had highlighted with the Q1. I was hoping you could just expand upon that as well, Powell.

Okay, Elyse. So let's go back to we're very consistent at Brown & Brown.

You may not like the consistency, but we're consistent, and we say it's a low to mid-single-digit organic growth business. And so we have not changed our position on the growth guidance, even though we really don't give growth guidance, we had to give you that in Q1.

We are very pleased with the way Retail is performing because of the breadth of our capabilities and our market relationships. And I find it interesting, Elyse, if I may take a moment that there are some people out there that thought 6.5% organic growth was not that good a quarter.

And I'm surprised because we think it's a good quarter. And if you think about historically, which what people are saying is there is a movement back to more traditional organic growth levels.

And as you've seen by the other firms that you cover, it seems to be occurring. I think it's an interesting perspective.

And so depending on who you are and in your case, you didn't see it exactly the way we did this quarter, but we feel good not only about Retail, but about Wholesale and Programs and we also feel good about the rest of the year.

Yes, if you would -- it's Andy here. If you go back to our prepared comments, the thing that we said inside of there is, we're not seeing the buyers of insurance materially change their level of investments at this stage.

It doesn't mean that things can't go positive or negative on that one. But we still feel good with the backdrop right now and continue, honestly, from where we were 3 months ago to now, we're not materially changing our outlook.

Just a couple of quick ones on property. I think your non-CAT property pricing description was flat to up 5%.

I think that's pretty consistent with 4Q. Do you think is non-CAT property at a pretty good equilibrium.

Do you think it stays at this level?

I think, Mark, that's hard to tell right now. And the reason I say that is, although there's not as much chaos in that segment right now, that assumes that we have maybe a light hurricane season.

If we have an active hurricane season, where there's landfall and significant damage, I do believe that, that definitely impacts standard market pricing. The other thing is, let's not lose sight of -- there are other areas that are dealing with things that maybe we don't talk as much about, i.e., hail storms and tornadoes in places where deductibles are changing very significantly.

And just -- I know it's obvious, but the wildfire exposure and just fires, in general. And so you have all these dynamics that are going on at once.

And so the long-winded answer of saying hard to say. I think it's probably pretty good right now, but we are going to wait and see relative to the storms this year, and those are across all segments, wind, hail, tornadoes, fire, et cetera.

Very good. And then on the CAT property, in your experience, you talked about how it runs up and then it runs back down.

Would it usually be kind of one and done, you get that down 30% or what have you, and that tends to stabilize? Do you think that's a multi-year process.

You get decrease this year and then maybe decreases next year as well. What would your experience say?

So let's back up and say that this particular period of time has been different than in the past. So historically, I would think that it would go up for 1 or 2 years and then come down for 1 or 2 years or a little more, and then it would sort of kind of do its thing.

In this case, we went up for an extended period of time, let's say, it was 5 years. And the pricing, as you know, typically is never exactly perfect.

So those CAT prices, if you looked at them, actuarially are probably a little higher in some cases than they should be. And as a result, there's going to be downward pressure this year.

And then the question is, what happens if there's a storm or not. If there is not an active storm season, we will see additional pressure next year.

If there is a storm, then that changes that statement. But I don't believe that it will go down as rapidly for as many years as it has gone up.

That is an important distinction because there is some level of discipline. I just don't know where that floor is.

And so it's a very interesting time, and it's opportunistic. And once again, it depends on the hurricane season, which, by the way, starts in just over a month.

We're going to have 2 more questions if we can.

Question I had for you is on this dynamic between some of the large, large end of the market pricing trends we're seeing versus, I'd say, more stable or still increasing the small to medium end of the market. And I was just interested in your perspective on that from your viewpoint, what's driving, I'd say, what's seemingly one of the bigger divergences that we've seen there?

And what -- how would you characterize Brown's sort of exposure to those trends over the next couple of years if they persist?

Okay. So we -- as I like to describe our firm, we are a truly middle and upper middle market business.

That is the vast majority. We have a good SME book, and we do have some very large accounts, too.

And we're very strategic about how we work with those customers. So Alex, what I think you're referring to is this, let's paint the backdrop.

Number one, the most competitive environment on a rate standpoint, per unit typically is in the largest accounts. And as a result, the large account space historically has not made much money for the insurance carriers.

These are broad generalizations. Conversely, on the lower end, the SME and the middle market has been more profitable because the rates, if you look at the rate of a similar business in the very large account space and one in a smaller unit or smaller business, that rate is going to be a little bit higher.

And the performance on those accounts historically has been substantially better. So the carriers write and want to write that very profitable business.

So having said that, remember, the very large accounts in many instances, are on fees. So it's not driven by commissions where small, medium and upper middle market accounts are typically on commissions.

So if you were going to paint that picture, and we'll just compare it to CAT property, if you get paid a commission on something that pays $100,000, and this year, it's 70,000, then your revenue goes down. Conversely, if they pay $7 million and it goes from $7 million to $6 million, your fee, very -- in many instances stays the same, so your revenue is generally the same.

Did that answer your question, Alex?

Yes. That's very helpful.

My other questions were answered.

Thank you, Alex. We'll take one more.

I just want to check in, now that this is becoming more relevant, whether you're seeing a difference in economic growth expectations from clients outside of the U.S. as you are domestically?

I think there's more questions about growth overseas than we find here in the United States. That's a very broad statement, but I think it would be moderated slightly.

And I think it depends on where you are.

Meyer, we're not seeing anything that is like this material change in outlook. I think back to Elyse's comment, and we said in the markets in which we participate, I mean, in Europe, we're primarily in England and Netherlands and Ireland are the major markets for us.

And the backdrop there is still good. It doesn't mean there's not some pockets here and there, but there's pockets everywhere.

There's pockets up in Canada, et cetera. So -- but no changes materially on that front.

Go ahead, Kevin.

Yes. Thank you all very much.

As we said, I think we had a really -- we feel we had a really good quarter and are excited about Q2 and beyond. Hope you all have a wonderful day, and thank you for your time.

Bye.