Q2 2024 Brown & Brown Inc Earnings Call
Participants
J. Powell Brown; President, Chief Executive Officer, Director; Brown & Brown Inc
R. Andrew Watts; Chief Financial Officer, Executive Vice President, Treasurer; Brown & Brown Inc
Mark Hughes; Analyst; Truist Securities, Inc.
Michael Zaremski; Analyst; BMO Capital Markets Equity Research
Elyse Greenspan; Analyst; Wells Fargo Securities, LLC
Yaron Kinar; Analyst; Jefferies Financial Group Inc.
Robert Cox; Analyst; Goldman Sachs Group, Inc.
Grace Carter; Analyst; BofA Securities
Meyer Shields; Analyst; Keefe, Bruyette, & Woods, Inc.
Michael Ward; Analyst; Citigroup Inc.
Scott Heleniak; Analyst; RBC Dominion Securities Inc.
Presentation
Operator
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, including answers given in response to your questions, may relate to future results and events or otherwise before 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 reference 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 the investor presentation for this call, on the company's website at www.bbinsurance.com by clicking on the Investor Relations and then Calendar of Events.
With that said, I will now turn the call over to Powell Brown, President and Chief Executive Officer. You may begin.
J. Powell Brown
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 number four. 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 EBITDA 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 continued 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 as 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 and the exception 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 health care 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 remain 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 US 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 as 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 rate 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 poor construction 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 increased 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 rate 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 driver 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're 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.
Insured's 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 continue to drive impressive growth.
Wholesale Brokerage delivered another strong quarter with organic revenue growth of 11%. This performance was primarily driven by writing more net new business within our binding and personal lines 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.
R. Andrew Watts
Good morning, everyone. We're over on Slide number seven. 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'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 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.
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 the 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 move over to slide number eight. 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 number nine. Programs had another strong quarter with total revenues increasing 15.8% and 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.
Moreover, on slide number 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.
There are 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 basis points 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.
J. Powell Brown
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 the 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, any really, 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's meaningful storm activity this summer, casualty pricing will more than likely continue to move higher.
On M&A front, we feel good. We're talking with lots of companies. Our pipeline continues to be robust and we are in a strong capital position. For Brown & Brown, our historical success has been rooted in our disciplined approach to building relationships, ensuring financial, -- 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.
Question and Answer Session
Operator
(operator instructions)
Mark Hughes, Truist Securities.
Mark Hughes
Thank you. Good morning. Anyway you could break out the impact of property on organic growth this quarter in these issues 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?
J. Powell Brown
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 seven one 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, the -- 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 in 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'll dictate on what continues to happen in pricing in Q3 and beyond.
R. Andrew Watts
In-market. Good morning. It's Andy here. One of the things we mentioned during our prepared comments was just the impact of diversification and would just suggest. think about our comment there because properties pretty balanced in our overall bookings in the second quarter is larger from the CAT property placements that's out there.
But we've got more than just CAT property inside of our book, from customer sizes, locations, industries, et cetera. So I'm 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 move in the other direction inside there.
Mark Hughes
Understood. How you see the casualty pricing you expect to continue to move higher. Is there anything you're seeing in the marketplace? So there's been some reserve issues or anything that suggest 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?
J. Powell Brown
Well, I don't think there's one saying, Mark, it's a point two, 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 want to $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 then others. So if you asked me which you haven't quarter or two or three, really tough classes of business from a casualty standpoint, I would point to habitational. So apartments to I'd put anything with lots of liquor distribution, not distribution, but consumption.
So like a restaurant that's 70% of its revenue with 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 products manufacturer might be up 10%, 8%, 7%, 5%, whatever the case may be. But you may have habit 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 disciplined around pricing pressure on casualty more so than any time in my career.
Mark Hughes
Very good. Thank you.
J. Powell Brown
Thanks, Mark,
R. Andrew Watts
Thanks, Mark.
Operator
Michael Zaremski, BMO.
Michael Zaremski
Hey, great. Good morning. I guess I had three quarters double digit the last six. Pretty impressive, but it kind of doesn't make a trend. So I guess just along the lines of the marketplace discussion you've had so far. If there's upward pressure on levels of casualty, which are material.
I would assume within the your portfolio and you gave us good color on property might decelerate 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 you also mentioned that there's more shopping center, maybe more new business wins, which might not be sustainable. Anything else you want to call out that we should be thinking about back my our heads about that it might not be sustainable in the near term?
J. Powell Brown
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 in 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. What's happening in the Pacific Northwest and 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 tried to deliver for our customers each and every day, and we have 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 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 to. I mean, I'm not trying to say we're immune to that. We're not but we just feel good about what we -- 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 all have employees. We have leaders, we don't have managers and we have an ownership culture, as you know.
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.
Michael Zaremski
Obviously, clearly great results. Just just to see if I can get any other color. I guess lastly, I'm looking at the transcript, I think you said you're seeing more rate decline, open brokerage versus binding authority within the Wholesale segment. If I heard that correctly, and if I am right, any further color there that's worth?
J. Powell Brown
Yeah, remember in let's just use open brokerage for a minute. Think of that as property. So we already talked about property, casualty is got upward pressure and professional liability got downward pressure. So two of the three in there have doubt 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.
R. Andrew Watts
And then Mike, keep in perspective that generally the second quarter is one of the heavier ones for property,
Michael Zaremski
Okay. Thank you very much.
R. Andrew Watts
(multiple speakers) Let me clarify CAT property.
Operator
Elyse Greenspan, Wells Fargo.
Elyse Greenspan
Hi, Thanks. Good morning. My first question is on the guidance. The 50 basis points to 100 basis points of margin expansion? Where you fall within that range depend on if the wind blows or not, and whether you see losses under your captive?
R. Andrew Watts
No, I think it's got a bunch of factors in it to a lease of the drives. And I think it depends upon outlook for contingents, how have they moved 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 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 one goes up, the other one probably goes down and vice versa. So there's a balancing out of all that. It's just always hard to determine exactly where a storm may hit or not hit and uninsured properties.
Elyse Greenspan
Okay. But then I guess, right. So the 50 basis points to 100 basis points, I mean, you guys were at 130 basis points for the first half of the year. So that does imply a 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 off?
And then I know you had that one-off by some of that you do get 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?
R. Andrew Watts
Yeah. Keep in mind, which I think we've talked to pretty much everybody about this is obviously last year was a -- it was a calm storm season. And so our cap has 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. And there is yeah, we would plan for storm claim activity. Obviously, if it doesn't happen, that would be upside. And I think most everybody, at least including yourself, has that in the models for the third quarter on the margins coming backwards.
Elyse Greenspan
Okay, thanks. And then on programs, you guys have seen pretty consistent, strong double digit growth in that business. I know you called off, you called out one growth initiatives 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?
J. Powell Brown
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 add a little rate pressure but they could also basically it comes down to writing more new customers.
So from a standpoint of what I think is. 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, you're -- 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.
Elyse Greenspan
Yeah, I was pointing out the double digit That's helpful. That's helpful color. Thanks for the color.
J. Powell Brown
Thank you.
Operator
Yaron Kinar, Jefferies.
Yaron Kinar
Thank you. Good morning. Maybe one clarification after the last set of questions. So in the guidance range for margins, even in the 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?
J. Powell Brown
Correct. We are. Yes.
Yaron Kinar
Okay. And then, Powell, I am curious some, I want to circle back to your comment about pricing pressure and casualty being kind of the worst in your career. I was just I guess that caught me off guard a little bit, not that I don't recognize that there is pricing pressure mounting in casualty.
But just looking back to so the 2018 to '20 years or even going back a bit further, to maybe the early 2000s, late 1990s, you're seeing the current environment and even worse than that from a pricing perspective?
J. Powell Brown
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 at a graduate school at a wholesale broker in New York.
And so when I started seeing big casualty of all sizes and shapes and not just big, in the early 90s and 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, 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 (technical difficulty) on a 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 broad (technical difficulty) modest impact of pricing discipline in casualty that I recall. So I only have back to 1990.
Yaron Kinar
Got it. 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 from the leaders of growth are coming from?
J. Powell Brown
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 to 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 that's how we've seen it.
Yaron Kinar
Great. Thank you. Very much.
J. Powell Brown
Thank you.
Operator
Rob Cox, Goldman Sachs.
Robert Cox
Hey, thanks. 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 improve retention now that we're on the other side of those large increases?
J. Powell Brown
Yeah, 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, it 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.
R. Andrew Watts
Yeah, Robert, in the US market, I guess I'm always your comment, don't take it like we're out of the woods in like we're in a completely different level of the cycle. I mean, the 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 '25 or 40s or anything like that?
It's not like we've been doing this for a few years. So customers right now are saying in many cases, that's one. I hate to 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.
Robert Cox
Okay. Got it. I appreciate that. And maybe just as a follow-up on contingent commissions? Are you already starting to see 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, 2025?
J. Powell Brown
I think if we just continue to see loss activity, I'm not even talking just solely about the casualty, but we see loss activity impacting profit sharing and contingencies. So I think it is a kind of a universal kind of across the board phenomenon. It's not one line of business.
R. Andrew Watts
Yeah, I mean, Rob, the areas that has been under pressure for a while, which we've talked about in retail is auto. And I 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.
Robert Cox
Okay, thank you.
Operator
Gregory Peters, Raymond James.
Yeah, hey, good morning. This is [Sid on] for Greg. Just staying with the contingent commissions and I understand that 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. Anything that could bleed into the third or fourth quarter from that decline?
R. Andrew Watts
Morning, Sid, Andy, here. Is we had some small amount of troops with the accruals that we made last year. But this is just as we talked about before, primary impacts around auto as well as some of the other lines inside of there.
Okay. And then just as a follow-up and 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 on there moving forward?
R. Andrew Watts
Yeah, no real seasonality to 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, Rob, that is some we've got about $500 million we're sitting on which we'll use for paying down the notes to come up in September for maturity. So that drove some little bit of incremental interest income in the quarter.
All right. Thank you.
R. Andrew Watts
Thank you.
Operator
Grace Carter, Bank of America.
Grace Carter
Hi, good morning. 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. So bleed into the other segments going forward, do you think that I'm just kind of the loss ratio impact there is pretty isolated to the retail segment?
R. Andrew Watts
Morning, Grace I guess from what we can see right now, we don't see a significant bleed over. Obviously, anything's possible at this stage, but feel like it's probably more isolated in retail at this stage.
Grace Carter
Thank you. I guess over time, you have 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 are thinking about maybe the glide path back towards sort of historical levels and just how long you think that it can just sustain at these elevated levels that we've seen over the past several quarters? And just sort of any sort puts and takes there thinking about from that perspective? Thank you.
J. Powell Brown
So good morning, Grace. 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, eight now, that's number one.
Number two, from a standpoint of organic growth. The growth that we are seeing here domestically and our businesses is very similar, the 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.
Grace Carter
Thank you.
Operator
Meyer Shields, Keefe, Bruyette & Woods.
Meyer Shields
Thanks and good morning. From a big picture perspective, could 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. Wondering if it represents sort of a permanent change and growth process?
J. Powell Brown
Yeah, 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, where 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 in the employee benefits. It could be on casualty it could be a big property schedule, it could be CNO, 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 embellish 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 that custom those custom solutions for our customers, pretty powerful and we're having a lot of fun. We're working hard, but we're having a lot of fun, too.
Meyer Shields
Okay, perfect. That's very helpful. And then much smaller question just 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 continued pressure as opposed to a year ago?
J. Powell Brown
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 -- that's terrible. But it highlights some of that as it rolls through in the carriers' results. But it's not -- That was going on last year and it was going on four years ago. So don't beside. There's not let's be clear on that.
Meyer Shields
Okay. Got it. Thank you very much.
Operator
Mike Ward, Citi.
Michael Ward
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 programs is actually exposed to casualty or social inflation and how the underwriting margins have been trending?
J. Powell Brown
No, we don't break that out, Mike, sorry.
Michael Ward
Okay. And then, maybe just on the captives. I was hoping you could refresh us on some of the economics with some of the changes with the quota share captive recently. We're just looking at the Q, I think you sold a stake in 1Q and then the written and earned premium spiked in 2Q. I'm just kind of curious if you have an outlook for that in the back half in terms of premiums and commissions or fee tailwinds?
J. Powell Brown
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 (technical difficulty) performance of our captive, a 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 or 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. 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 that's a long-winded answer of saying, no, but it's more of a clarification on how we want to approach it going forward, just part of the business, just like all the other businesses that we have and maybe 500 plus locations. So that's how we would answer it.
Michael Ward
Got it. Understood. Maybe could i squeeze is just a backward-looking non-guidance one just give you opportunity to talk about the UK for a sec. I think you said that has a similar growth profile of the US, but it looks like revenue accelerated in UK?
Just curious if you have been seeing any difference in the organic growth between the two?
J. Powell Brown
So let me backup. 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 Kendro 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 one 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 we -- I talk about, we're 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 for ever.
So what I would say is there's 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 would say it.
Michael Ward
Thank you so much, Powell.
Operator
Scott Heleniak, RBC Capital Markets.
Scott Heleniak
Yeah, thanks. Good morning. Just wanted to 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?
J. Powell Brown
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 up market 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, 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 are -- we -- If you had asked me, seven, eight years ago you have a friend that has a manufacturing operation has 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, 2000 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 customized 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.
Scott Heleniak
Got it. Makes sense. And just the only question I had was just on the wholesale units, it was strong again, organic 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?
J. Powell Brown
Yeah. 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 and 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 writing the full limits of wind, they're writing a sublimit, 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 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 $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 then 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 as fire resistive, that's still hitting against your CAT. So it is a lot different than it was frame, 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.
Scott Heleniak
Yeah, okay. Makes sense. I appreciate it. Thanks for all the answers.
J. Powell Brown
Yeah, absolutely.
Operator
Thank you. I will now, I turn the call back over to Powell Brown for closing remarks.
J. Powell Brown
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.
Operator
This concludes today's conference call. Thank you for your participation. You may now disconnect.