Brown & Brown Inc. (NYSE: BRO) reported higher third-quarter revenue and adjusted earnings, supported by acquisitions and modest organic growth, while its adjusted operating margin narrowed and Specialty Distribution posted an organic revenue decline. The insurance intermediary also increased its synergy expectations for the Accession integration, though projected one-time integration costs rose.
Total revenue for the third quarter of 2026 increased 7.4% to $1.73 billion from $1.61 billion a year earlier. Organic Revenue, a non-GAAP measure excluding items including newly acquired operations, divestitures, foreign-currency translation and a litigation-related impact, grew 1.2%. Organic Revenue with Contingents rose 1.5%.
Adjusted EBITDAC increased 1.7% to $597 million, but the adjusted EBITDAC margin fell 200 basis points to 34.6%. Adjusted net income attributable to the company edged up 0.6% to $356 million, while adjusted diluted earnings per share increased 1.9% to $1.07. The diluted weighted-average share count declined 0.6% to 330 million.
On a GAAP basis, income before income taxes was $320 million, compared with $311 million a year earlier. Net income attributable to Brown & Brown rose to $240 million from $227 million, while diluted earnings per share declined to $0.67 from $0.68. Adjustments in the 2026 quarter included acquisition and integration costs, amortization, changes in estimated acquisition earn-out payables and a mark-to-market change in an escrow liability.
Year-to-date cash flow from operations rose 13.3% to $1.14 billion. Brown & Brown repurchased $250 million of stock during the quarter, bringing repurchases for the year to $750 million. It also completed four acquisitions and said it continued to build its acquisition pipeline.
Retail Growth Offsets Specialty Weakness
Retail segment revenue increased 10.8% to $978 million, reflecting both acquisition activity and organic growth. Organic Revenue rose 2.6%, driven by net new business and expansion in exposure units, partly offset by slightly moderating rates across many product lines. Organic Revenue with Contingents increased 2.5%.
Retail adjusted EBITDAC climbed 11.3% to $275 million, and the segment’s adjusted margin increased 10 basis points to 28.1%. Brown & Brown attributed the faster earnings growth relative to revenue to expense management and realized synergies.
The company said employee benefits rates increased 9% to 11%, while standard property rates ranged from a 5% decline to flat. Casualty pricing rose 2% to 5%.
Specialty Distribution revenue grew 8.5% to $739 million, primarily because of acquisitions and higher Organic Contingents. However, Organic Revenue declined 0.8%, reflecting lower catastrophe and difference-in-conditions property rates, difficult conditions in the wholesale business and the absence of significant flooding events. Performance in casualty programs provided a partial offset. Organic Revenue with Contingents increased 0.3%.
The segment’s adjusted EBITDAC rose 7% to $320 million, while its adjusted margin declined 60 basis points to 43.3%. Investments intended to expand the company’s capabilities in Europe offset underlying margin expansion, according to the presentation.
Accession Synergy Expectations Increase
Brown & Brown said Accession’s first-year total revenue was in line with the approximately $1.7 billion estimated when the transaction was announced. Adjusted EBITDAC margin and adjusted diluted EPS accretion were also described as consistent with expectations.
The company now estimates about $50 million of Accession-related EBITDAC synergies for full-year 2026, above its previous outlook of $30 million to $40 million. It expects $175 million of run-rate synergies by the end of 2028, compared with an earlier estimate of approximately $150 million.
At the same time, projected one-time integration costs increased to a range of $250 million to $300 million from $200 million to $250 million. Brown & Brown said it had completed milestones involving leadership, employee retention, financial controls, compensation alignment, branding, operating models and system integration across the combined business.
Market Outlook and Risks
Management described the economic outlook as stable but noted the potential for greater caution due to inflation and rising interest rates. Rate changes across most admitted insurance lines are expected to remain broadly consistent, with possible slight moderation during the remainder of 2026. Excess-and-surplus casualty rates are expected to continue rising, while catastrophe property rates are expected to remain lower in the fourth quarter amid abundant capital.
Brown & Brown said its capital-allocation priorities remain focused on talent, share repurchases, debt reduction and selective acquisitions. It also reported continued progress on technology, data and analytics initiatives.
The company cautioned that its synergy targets depend on significant assumptions and may not be achieved on schedule or in full. Other disclosed uncertainties include Accession integration and financing risks, increased indebtedness, underwriting exposure in certain captive insurance operations, catastrophe-related volatility, foreign-exchange movements, cybersecurity threats, regulatory changes, acquisition execution and changes in insurer capacity or intermediary relationships. The quarterly figures presented were preliminary and unaudited.
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