Brown & Brown Q3 2026: revenue up 7.4% on acquisitions, organic growth just 1.2%, EPS dips to $0.67

Brown & Brown is an insurance broker: it sells insurance on behalf of insurance companies and earns commissions and fees for placing the cover, but it does not pay the claims itself, so a bad hurricane season does not hit its income statement the way it hits an insurer's. Its third-quarter 2026 revenue rose 7.4% to $1,725 million, yet almost all of that rise came from businesses it bought. Organic revenue, meaning revenue from operations it owned in both years, grew only 1.2%. Diluted earnings per share slipped 1.5% to $0.67, while the company's adjusted EPS rose 1.9% to $1.07.

Results in figures

Brown & Brown does not report an operating income line, so the margin used in our figures strip is pretax income divided by total revenue, the company's own "Income Before Income Taxes Margin". EBITDAC is the company's profit measure before interest, taxes, depreciation, amortization and changes in acquisition earn-out estimates; the "Adjusted" version also strips out deal and integration costs and the escrow revaluation explained below.

Nine months: revenue $5,302M (+23.4%), net income $954M (+20.8%), diluted EPS $2.57 (flat), adjusted EPS $3.52 (+5.7%), organic revenue growth 0.3%.

Where the growth came from

The 10-Q breaks the $143M rise in core commissions and fees (commissions and fees before profit-sharing bonuses from insurers) into pieces: $156M from acquisitions, $17M of net new and renewal business, minus $13M from businesses sold, $16M from the "Litigation-Related Impact" and $2M of currency.

Retail sells insurance directly to businesses and individuals. Organic revenue grew $22M (2.6%), the best rate this year, from "net new business written during the preceding twelve months and growth on renewals." It also carried the whole $16M litigation hit. Retail's pretax income fell 10.4% to $147M because of higher intercompany interest charges, a bigger earn-out charge, integration costs and depreciation, even though its adjusted margin edged up.

Specialty Distribution covers the programs business (Arrowhead), the wholesale broker Bridge Specialty Group and Arrowhead Specialty. It shrank organically by $5M (-0.8%). The filing again blames "declining rates on catastrophe ('CAT') property". Brokers are paid a percentage of the premium, so when insurers charge less for storm cover, the commission shrinks too. Its margin slipped 0.6 points on the organic decline and on spending to build out in Europe, partly offset by higher contingents.

Contingent commissions, the bonuses insurers pay brokers when the business they placed turns out profitable, rose $7M to $80M. The company credits better underwriting results at its insurers, premium growth and qualifying for bonuses it missed last year. These depend on a quiet claims year and can swing either way.

Takeaway: The Accession deal has now mostly passed its first anniversary, and without it Brown & Brown is growing very slowly: 1.2% organic, about 0.1% if the accounts lost to a poaching competitor are counted. Revenue rose 7.4%, but diluted EPS fell. The $750M of buybacks this year has barely reduced the diluted share count (-0.6% year on year), because last year's figure already included the shares issued to pay for Accession.

What the headline numbers hide

• Acquired vs organic growth. $156M of the $143M increase in core commissions and fees came from acquisitions (it is larger than the total because disposals and litigation losses pulled the other way). Organic growth was $17M. Year to date the split is starker: $985M acquired against $10M organic (0.3%).
• The litigation adjustment flatters organic growth. "Litigation-Related Impact" is revenue from specific clients and from business written last year by former employees, all lost to a competitor Brown & Brown is suing in several jurisdictions. The company takes it out of last year's base ($16M this quarter, $44M year to date), so the 1.2% organic figure does not show this lost revenue. Counted in, organic growth this quarter was about 0.1%.
• A one-off in last year's quarter makes the comparison harsh. Q3 2025 included about $29M of interest earned on cash raised in June 2025 and held to pay for Accession. That income is gone, so investment and other income fell $31M to $25M. It explains most of the drop in the adjusted EBITDAC margin from 36.6% to 34.6%. Excluding it, last year's adjusted EBITDAC would have been about $558M, and this year's $597M would be roughly 7% higher rather than 1.7%.
• Other items in pretax income, both years. This quarter: a $27M earn-out charge (higher estimates of what Brown & Brown will owe sellers of acquired firms, mostly from the Accession deal), $36M of acquisition and integration costs, $110M of amortization of acquired intangibles, and a $14M non-cash gain from revaluing Brown & Brown shares held in escrow for Accession's sellers. Year ago: $11M earn-out charge, $50M integration costs, $93M amortization and an $8M escrow loss. Strip out the earn-out, integration and escrow items and pretax income was about $369M, against about $351M a year ago once the deal-cash interest is removed (+5%).
• The escrow gain lifts net income but not diluted EPS. The $14M escrow gain is not taxable, which is why the effective tax rate fell to 24.7% from 26.4%. It helps explain why net income rose 5.7% while pretax income rose only 2.9%. Accounting rules (ASC 260) require diluted EPS to exclude that gain and to count the escrowed shares. That is why diluted EPS ($0.67) fell even though net income rose.
• Some cost relief is not repeatable. Pay costs in offices owned in both years fell $14M. The filing cites lower stock-based compensation "driven by the Company's performance", lower health-plan claims, and lower pay after the employees tied to the litigation left. Lower incentive accruals because results missed targets help margins this year but are not an efficiency gain.
• Buybacks did little for EPS this quarter. Brown & Brown bought back 3.63 million shares for $250M (average $68.87) and $750M year to date, leaving $650M of authorization. Diluted shares fell only 0.6% year on year, so buybacks explain under 1 point of EPS change. The revolving credit line had $275M drawn at quarter-end, so part of the buyback was funded with debt.
• Cash conversion is healthy. Operating cash flow for nine months was $1,140M against net income of $957M (1.2x). Commission and fee receivables rose 5% since December to $1,515M, in line with revenue.
• Guidance. Neither the 10-Q nor the earnings release gives numeric guidance, so there is no target to compare against.

On balance the quarter is understated: diluted EPS fell 1.5%, but last year's quarter had about $29M of one-off interest income on deal cash and this year's earn-out charge was $16M larger. The underlying business is still growing slowly, and those adjustments do not change that.

Did last time's read hold up?

Our Q2 2026 report said catastrophe-property rate cuts would keep weighing on Specialty Distribution, that Retail was improving, and that headline growth would fall sharply toward the organic rate once Accession counted as organic from August 2026. All three held. Revenue growth dropped from 30.4% in Q2 to 7.4%. Retail's organic growth rose from 1.5% to 2.6%. Specialty Distribution was still negative, though its decline narrowed from -3.5% to -0.8%, and the filing again blames CAT property rates. Group organic growth turned positive at 1.2%, from -0.7% in Q2.

Outlook

Management gave no figures. CEO J. Powell Brown cited efforts to "win more customers in spite of a challenging rate environment." From Q4, Accession is fully in the organic base, so reported revenue growth should run close to the organic rate plus smaller tuck-in deals. Three things to watch in the Q4 and full-year 2026 results, likely due in late January 2027:

1. Specialty Distribution organic growth turning positive. It improved from -3.5% to -0.8% in one quarter. A further move depends on whether storm-cover price cuts slow after the 2026 hurricane season.
2. The litigation drag. It has grown from $10M in Q1 to $18M in Q2 and $16M in Q3 ($44M year to date). Once the lost accounts drop out of the year-ago base, the gap between reported organic growth and actual growth should close.
3. Leverage and buybacks. With $650M of authorization left and $275M on the revolver, watch whether buybacks continue at $250M a quarter or slow while debt is paid down. The dividend increase to $0.18 (from $0.165) adds about $5M a quarter to payouts.

Our view: Brown & Brown has a lot of scale from Accession and a stable margin profile, but until organic growth gets back above low single digits, EPS growth will come mostly from the next acquisition rather than from the existing business.