A few weeks ago, I was at an investment conference with my twenty-year-old son, who is studying commerce at university. The event featured presentations from a range of highly successful companies, each with their own unique story of growth and triumph. After the second presentation, my son turned to me and said, “Dad, it was like that presentation was written for you.” The company in question? Brown & Brown.

As someone who has long been interested in the insurance brokerage industry, I decided to take a closer look at Brown & Brown. The more I learned about the company, the more I saw that it embodied many of the qualities I look for in great businesses.

Insurance brokerages, uniform sales, HVAC distributors, auto and airplane parts dealers, car rentals and chicken sandwiches may not seem like the most thrilling businesses. Yet, it is often these unassuming sectors that yield the most impressive returns. Since 1993, insurance broker Brown & Brown has achieved a compound annual return of approximately 18.5%, outpacing the S&P 500’s 10.5% annual return.

The insurance broking industry is both fascinating and essential, playing a critical role in helping businesses secure the right coverage and providing vital support when claims arise. Companies like Arthur J. Gallagher & Sons, Marsh McLennan, Aon, and Willis Towers Watson have also delivered market-beating long-term returns, underscoring the industry's resilience through various economic cycles. Notably, the average age of the ten largest American insurance brokers is exactly 100 years. Among them, Brown & Brown stands at the pinnacle.

It may not be surprising to hear that Brown & Brown is a prime example of a company that shares key qualitative success traits with other iconic organizations we’ve featured - Enterprise Rent-A-Car, LVMH, Chick-fil-A, Les Schwab Tires, Heico and Cintas. Each of these companies understand that true success hinges on empowering people, decentralising, fostering a culture that prioritizes relentless customer focus, and making strategic, long-term decisions.

Brown & Brown’s journey began in 1939 when J. Hyatt Brown’s father founded a small insurance brokerage in Daytona Beach, Florida. In 1959, Hyatt joined his father and brother at the agency, which was generating approximately $45,000 in annual revenue. Hyatt quickly recognized the potential for growth and implemented a strategy focused on aggressively securing commercial accounts, which transformed the agency at an impressive pace. After his brother pursued a different career and his father retired, Hyatt took full control by acquiring the business in 1963 for $75,000. His leadership style, built on unwavering integrity, employee empowerment, prudent financial management, and a relentless drive for performance and discipline, established the core values that became the foundation of Brown & Brown’s distinctive culture and sustainable growth. Today, those values continue to shape the company’s success, with Hyatt’s son, J. Powell Brown, leading the organization into the future.

The company's remarkable growth is propelled by a decentralized structure and an entrepreneurial spirit, where local teams operate with the independence and accountability of small businesses, delivering personalized service and superior results. Brown & Brown’s disciplined, long-standing acquisition program is also a key driver of success. By prioritizing cultural fit and building relationships over time, the company integrates high-quality businesses seamlessly, fueling long-term success. This strategic blend of organic growth and carefully selected acquisitions has established Brown & Brown as a prime example of how aligning culture and strategy can lead to consistent, market-beating performance.

I enjoy exploring exceptional companies to uncover the unique traits that fuel their investment success. Aligning your portfolio with these compounding machines has been a proven strategy for achieving long-term investment success. Below, you'll find some of my favourite insights gleaned from Brown & Brown annual reports, interviews, and published articles.

*Brown & Brown vs S&P500 1993-2024 normalised [Source- Bloomberg]*

Customer Focus and Exceeding Expectations

“At Brown & Brown, what makes us the same is a fierce passion for exceeding our customers’ expectations – every time. Every division of our Company and every teammate contribute their unique talents and skills to this unifying mission.” J. Powell Brown

“When we put the customer first, we know with great confidence that it will all work out for Brown & Brown in the long run.” J. Powell Brown,

“We're not just an insurance agent or an insurance broker, we are business partners. That's the way we think about it, that's the way we train, that's the way we enhance.” Barrett Brown

“The entrepreneurial spirit is deeply embedded in our culture, empowering teammates to do what it takes to provide best-in-class solutions and service.” J. Powell Brown

“While our competitors are primarily focused on the transaction, we teach our team to prioritize customer focus. That means learning to ask the right questions, really listening to the answers, and understanding the unique needs of each customer. Our continuous training is comprehensive, but it all comes down to one core principle: When the customer comes first, everything else takes care of itself.” J. Powell Brown

Long Term

“At Brown & Brown, we think long term and not merely quarter-to-quarter. We think about next year, three years from now, five years from now, and beyond, with our focus on cash flows and how to invest them wisely. By operating this way, we have consistently outperformed the S&P 500 and the other publicly traded insurance brokers.” J. Powell Brown

“We are trying to optimise returns over a long period not maximise them. You don’t create long term value in a sprint.” Andrew Watts

“We don’t try and think about beating the next quarter as it might compromise a result in the next 6 quarters.” Andrew Watts

“We don't manage the business quarter-to-quarter. Now, the analysts want to know quarter-to-quarter, and some of you, not many of you, but some of you out there as investors do get excited about the quarterly changes. Oh, the margin's down here, the margin's up, the growth rate here. We don't think of it that way. All right. We report every 13 weeks, we have a scorecard, we understand. But we think about it a year, 3 years, 5 years, 10 years, 15 years.” J. Powell Brown

“We don’t mind investment that takes us backwards, if it adds long term value.” Andrew Watts

Promote Ownership

“Twenty-one percent of the company is owned by teammates. Sixty percent of teammates are owners. If you own a share you will care more. It’s something embedded in our DNA in the 1970’s. We think it’s a real differentiator.” Andrew Watts

“We have 60% of our teammates are shareholders. That creates a different mindset in the organization. How you make decisions is different if you look at that as your money? How you lead is different when you think that the investment you're making matters? Our teammates think about our business, they care, they ask the questions.” Julie Turpin

Decentralisation & Empowerment

“What differentiates us? And I could go through all of these things, but what I want you to know is this. We're a decentralized sales and service business. That does not mean that behind the scenes that we don't standardize certain deliverables, IT, finance, internal audit, things like that. That's different, but the individual offices dictate what they go after, the people they hire, the services they provide, we have a suite of services. And sometimes those services are not provided from an office, the individual office that is going after the business.” J. Powell Brown

“In a local office, wherever it is, in upstate New York or in San Antonio, Texas, that local office is hiring the people. They're picking the kinds of business they go after. It could be school boards, it could be contractors, it could be housing authorities, public entities, whatever, and then they invest in that business. We are actually, we invest behind winners. If you show you can grow your business organically and through acquisition, we put our chips behind those people.” J. Powell Brown

“With those closest to our clients accountable for profitability, Brown & Brown eliminates layers of redundant management and reduces high overhead associated with centralized operations. Decision-making is streamlined, and Brown & Brown’s managers are empowered to act decisively and react quickly to changes in the market.” J. Hyatt Brown

“At Brown & Brown, we believe that our local offices perform their best when given the freedom to adapt to their markets. This decentralized approach has served us well in the past, and we are confident that it will continue to drive our company’s growth.” J. Hyatt Brown

“Our decentralized structure allows decisions to be made on a local level, eliminating rigid rules and bureaucratic interference that can slow progress and stifle new ideas.” Dan Williamson

*Source: Brown & Brown - Company Overview - 2024*

Separate Profit Centres and Local Integration

“Much of our success grows directly from our decentralized structure in which our profit center managers are charged with both the authority and accountability for success. Placing decision-making authority at the profit-centre level, rather than at the corporate level, has resulted in superior customer service, higher pre-tax margins, improved operational efficiencies and, ultimately, increased profitability. By assuming the ultimate responsibility for all aspects of running their profit centers, Brown & Brown’s managers act essentially like entrepreneurs who have a personal interest in their agencies’ success. Our efforts to create a sense of ‘ownership’ among our employees is supported by a bonus program that plays an integral part in our compensation package. This well-devised compensation structure rewards decisions that result in higher operating profits. Conversely, poor decisions that negatively affect operating profits cost managers money in terms of reduced or forfeited bonuses” Tom Riley

“By locating claims and client service functions in individual profit centers where business originates, Brown & Brown ensures that its clients receive personalized service from local employees who have a vested interest in retaining and cultivating their business. Unlike many of the Company’s industry peers, who centralize their claims and client service operations in corporate offices hundreds of miles from their clients, Brown & Brown is committed to providing a level of personal service that only a local presence can offer.

While many companies rely on a team of client service representatives who have neither the knowledge of client accounts nor a personal stake in the retention of the business, Brown and Brown’s profit centres handle client service and claims functions for the business they generate. As a result, clients consistently receive the prompt and personal attention they deserve. Because each profit center operates much like an independent business, employees are held accountable for client retention numbers with a compensation system based on client satisfaction as well as financial performance.” J. Hyatt Brown

“By placing accountability for client-related decisions at the local level, quality service remains at the forefront of all business decisions. As a result, Brown & Brown has enjoyed superior client satisfaction, lower client turnover and ultimately higher profits. In an industry where client retention rates average 85%, Brown & Brown’s retention rate, which is in the mid 90% range, attests to the value of our decentralized model.” J. Hyatt Brown

“Each profit centre employs an accounting manager to act as its lead financial officer, closely monitoring costs and managing business at the grassroots level, where business originates. This approach leads to better control of expenses and ensures that financial information is reported accurately and promptly without duplicating the efforts of corporate accounting staff.” J. Hyatt Brown

“[In 1982] Brown & Brown reorganized to create a highly decentralized, flat system. Each office was divided into departments of business focus, such as small, middle and large commercial; personal; employee benefits; and bonds. Each department had accountability for profit and loss, and all direct and indirect costs. The Company measured everything and used the metrics to rank every office, department and salesperson. Those with the best rankings were recognized and honored. A monthly Revenue and Net Income – or Rev-Net – report was distributed to all profit centers to provide a snapshot of operating results and keep everyone focused.”

Confederation of Businesses

“We don't think of ourselves as a large organization. We think of ourselves as a bunch of very highly competitive teams that operate that operate under this umbrella called Brown & Brown, which creates a nimble, fast-moving organization.” J. Powell Brown

Internal Competition

“We are a performance based culture. It is very competitive. There are leaderboards everywhere. If you like being ranked you will like it here.” Andrew Watts

“Success can be directly attributed to the Company’s internal competitive posture. Entrepreneurial-minded employees thrive in the Company’s unique ‘survival of the fittest’ culture in which profit centre managers are afforded a great deal of autonomy with ultimate responsibility for financial results, fostering an entrepreneurial spirit. In this environment, profit centers are measured against one another and against their own past performance.” J. Hyatt Brown

“Even our highest-performing profit centres benefit from shared information as they identify ways to achieve even greater results. Just as athletes perform at higher levels with increased competition, we too benefit from the positive competitive environment that is so much a part of our culture. By vying for top positions, our strong ‘athletes’ can set their sights on achieving their goals and continually improving their performance.” Ken Kirk

Ordinary People doing Extraordinary Things

“The old saying that ordinary people can do extraordinary things bears true for us. While we consider that our employees are far more than ordinary, we believe that they achieve extraordinary results because they are challenged, empowered and rewarded for doing so.” Dan Williamson

Culture

“The continuous growth and inculcation of the Brown & Brown culture remains central to our consistent and continued success. The culture of a business organization is the intangible webbing that allows some to rise while others languish.” J. Hyatt Brown

“Ask anyone at Brown & Brown the secret to the Company’s seven decades of success, and they will give one answer: CULTURE.” J. Hyatt Brown

"Recruiting is the life blood, continued enhancement is all about our culture. It's either magnetic attraction or it doesn't seem like the right fit, and that's okay, nothing wrong with that." Barrett Brown

"Our leadership team is built with operators, and everyone has sat in multiple seats and grown through those seats and contributed to the change that equals what we are today." J. Powell Brown

“Company leaders believe change is constant, but culture survives, so Brown & Brown is forever. The Company’s culture will survive for one nanosecond longer than the youngest person in the Company who continues to believe in its culture.” Annual Report 2008

“Our culture is the backbone of our success. Ask what sets Brown & Brown apart, and you’ll get the same answer: the Company culture.” J. Powell Brown

Uncapped Earnings

“Brown & Brown’s successful track record attracts and retains quality individuals who aren’t threatened by competition. Rewarding individuals who display a strong work ethic and who enjoy writing new business is a hallmark of Brown & Brown. Top performers have no ceiling on their earning power, which is based on their ability to sell new business and retain existing accounts. Those top performers who meet annual goals are also awarded stock grants, driving them to continually seek out new opportunities.” J. Hyatt Brown

Transparency

“Monthly financial results are reported to all employees in both the income-producing units and integral service departments, the result of which is a team that clearly understands the company’s game plan and where they stand in relation to goals.” Dan Williamson

Lollapalooza

“A lot of people have always said, well, why are your margins higher than everybody else's? And the answer is, because we're disciplined and people say, well, that's easy to say. And the answer is no, it's actually true. We actually do the little things, the things that are really boring that don't sound like a big deal, we do them really well, maybe better than most, and it translates into high performance.” J. Powell Brown

“It is not about big ideas. It is about hundreds of small ideas, manifesting themselves every day between those we serve and those who serve them. To innovate. To experiment. To occasionally fail. To ultimately succeed and rewrite history. This is a drive that propels great companies to greater heights, and it is embedded in the culture of Brown & Brown Insurance.” J. Powell Brown

Walk The Floors

“We have leaders, not managers. You can’t just sit in your office.” Andrew Watts

“The entire leadership team of retail - Everyone is an operator, everyone still sits in the room, everyone sits with customers. It's still my favorite thing to do, it is fun and it is valuable. And as a leader, if I personally don't have the ability to get in the trench with a teammate and deliver, then what am I? I sit on the egg. We don't do that. So, we have to do it. It's a must. But that's not force-fed. Everyone gets excited about that. That's our culture, we have teammates.” Barrett Brown

“CEO Hyatt Brown and President Jim Henderson personally visit each of Brown & Brown’s 119 offices on at least a twice-a-year basis. More than simply ‘handshaking tours,’ on these trips Hyatt and Jim participate in weekly area sales meetings and discuss business with local producers, reinforcing the strong work ethic that is the backbone of our philosophy. This personalized communication lets our people know that company leadership is part of the local team, with a keen interest in its success.” Annual Report 2003

Valuing Employees

“We have teammates, we don't have employees. We are all about athletic teams. We think we are these very competitive individual teams under this umbrella called Brown & Brown.” J. Powell Brown

“As an organization we want to be the leading global provider of insurance solutions for our customers. So, if you think about it, most organizations say it's all about the customer, and we agree it's all about the customer, but it really starts with teammates. And if you don't have the right teammates, you can't keep the customers. And so, fundamentally, we are a culture that has teammates at the center of the organization.” J. Powell Brown

“People want to be recognised for accomplishments.” J. Hyatt Brown

“Brown & Brown is in the people recruiting and people-enhancing business. The Company has built its business – and reputation – on hiring and grooming top talent, following the example set by Hyatt.” Annual Report 2008

Hire Better

“Every time that we go out to find someone, we try to get a person who is a little better, and a little better, and a little better, and a little better. Because that’s the way you build an organization.” J. Hyatt Brown

“If you want to be promoted, you have to find someone better than you to do your job because what lifts other people lifts you.” Jim Henderson

“Perhaps the greatest challenge I foresee is our ability to continue to find good people. The quest for human capital is extremely important.” J. Hyatt Brown

“Brown & Brown doesn’t just look for people, it looks for special people. Leaders must be able to attract other high-quality employees and be secure enough not only to bring in someone more talented than themselves, but also to understand why that is of benefit to themselves and the Company.” J. Hyatt Brown

“Executives aim to hire people who are better, smarter and more aggressive than they are, ensuring that each generation of employees exceeds the one before. Recruiting and enhancing outstanding employees is at the core of Brown & Brown’s corporate culture – coined an ‘American Meritocracy.’” J. Hyatt Brown

Diversity

“We are achieving success by bringing in individuals from numerous different industries and professional backgrounds. As long as the person has an entrepreneurial mindset, a self-motivated attitude, and is turned on by challenge and reward, he or she can be a leader on the Brown & Brown team. Our management team is constantly seeking ways to ensure that we hire only the highest quality people and then give them the tools which enable them to grow to their fullest potential.” J. Hyatt Brown

Entrepreneurial Spirit

“Brown & Brown’s culture promotes the entrepreneurial spirit in people.” Shane Caldwell

“We are an ‘intra-preneurial’ company comprised of people who have built their businesses from the ground up.” J. Powell Brown

Training and Continuous Learning

“Much of the Retail Division’s success is a direct result of our people. We have concentrated efforts on ‘growing’ our sales force through our internal ‘insurance school.’” J. Hyatt Brown

“100% of teammates are trained through ‘Brown & Brown University.’” J. Powell Brown

“‘Knowledge is Power’ is an old proverb that carries a powerful message. In order to continue to better serve our customer base, Powell Brown and Tom Finwall formed ‘B&B University,’ our in-house insurance training program, in early 2004. The program was designed to arm our producers with a broad base of technical knowledge. In addition to its emphasis on technical coverage issues and premium calculations, the school inculcates the discipline that is so important to long-term success in our business. The results have been exceptional.” Hyatt Brown

“‘Brown & Brown University’ continues to be a very important part of the acculturation of the new people who join us through acquisitions and who come to us from other industries, as well as a centre for reinforcement and improvement of our technical knowledge and sales training. We teach everything from basic property and casualty insurance to complex health care solutions. We will continue to invest in the training and development of our current and future teammates.” J. Powell Brown

“‘Brown & Brown University’ has been going strong for 22 plus years. It is a forever education environment that we're continuing to invest in and build in.” Barrett Brown

“Part of our Company culture is our endless pursuit of learning and sharing knowledge. ‘Brown & Brown University’ is a critical part of our ongoing education program, and is a key component of our relentless pursuit of talent development.” J. Powell Brown

Change

“While many are watching us with an eye as to whether our entrepreneurial culture is sustainable, we are moving forward with plans that allow us to constantly evaluate ourselves and to continue early change as opportunities arise.” J. Hyatt Brown

“The only constant is change” is part of our corporate culture.” J. Hyatt Brown

Growth and Cash Flow

“Growth is the mantra.” J. Hyatt Brown

“The real measure of how you are running a business is cash flow.” J. Hyatt Brown

“We believe at the end of the day, growth of cash and conversion of revenues into available capital are key to driving shareholder value.” J. Powell Brown

Acquisitions

“Acquisitions must be high quality and fit culturally. If we build relationships with acquiring companies over time we find the financials work out.” Andrew Watts

“The Company targets only profitable, well-run agencies that have high-quality people with proven records of success in serving customers.” J. Powell Brown

“Cultural fit comes first, the way they relate to fellow brokers, insurance carriers and clients. Then we talk about how much we can pay.” J. Powell Brown

“Acquisitions, which account for nearly 50% of our overall annual growth, provide us with a crucial competitive advantage.” Jim Henderson

“We like tuck-in acquisitions, but it all starts with a cultural match.” J. Powell Brown

“If there is not a cultural fit, we do not move forward.” J. Powell Brown

“The economic value of mergers and acquisitions is apparent in our earnings statement. What is not apparent is the number of outstanding leaders that have joined Brown & Brown by virtue of the M&A process. This sourcing of ‘people talent’ through mergers and acquisitions is a key strength of our organization, which has evolved from our people-oriented approach of selecting the very best opportunities.” J. Hyatt Brown

“Mergers and acquisitions are central to our growth strategy, demonstrated by the more than 500 agency acquisitions in our history. While every opportunity needs to make financial sense, cultural fit is equally important.” Scott Penny

“Brown & Brown uses the same hometown approach when it makes acquisitions: It learns about the companies it buys by competing against them. ‘Our biggest competitor is not a large, publicly traded broker; it’s the best local agency in each town,’ says Powell. Such an agency, with 20 to 500 employees, is usually run by a guy Hyatt calls ‘the horse’ because he pulls the whole town along. He’s been head of the Chamber of Commerce, everyone knows him, and his social connections make it impossible to take away his business.

But even horses tire, and many smaller brokerages are run by the middle-aged men and women who started them. Their goal now is to take money out of the business and move toward retirement. That puts them at odds with their aggressive young producers who feel stifled in their ability to rise and don’t want to take a financial haircut when the boss bows out.

Brown & Brown’s top executives start a courtship process, meeting with these brokers several times at conferences or individually, to see if the prospect fits into the B&B culture. Brown & Brown opens up its own financials to show the prospect how it functions.

‘It’s like marriage,’ says Downs, who as a regional executive vice president negotiated several deals. ‘We date until we’re sure. We have no secrets. We share how our model works. Some will take what we say and implement it and that makes them more valuable when they do sell. That’s OK with us.’” Ed Leefeldt

“Although growth through acquisition has been accretive to earnings and has brought a substantial number of high-quality people to Brown & Brown, we must never lose our focus on internal growth. Selling new accounts and handling our existing clients to their pleasure, thereby enabling our firm to continue to enjoy a very high renewal retention rate, is essential to consistently grow our net income per share.” J. Hyatt Brown

Dividends and Re-investment

“We're really proud that we've increased our dividends for 29 years, but we don't have a very high dividend yield, because we think we can invest the money more in a better way and drive more value than actually paying it out in dividends. We'll buy stock back sometimes, if the stock's not appropriately valued.” J. Powell Brown

“Brown & Brown’s strategy is to deploy our capital back into the business by making internal investments, allowing us to take care of our customers and grow organically. We will also continue to reward our shareholders through dividend distributions and, opportunistically, buy our stock back.” Scott Penny

Fanatic

*Hyatt Brown [source: Annual Report 2008]*

"Come July 1, 2009, I will have worked for Brown & Brown for 50 years – 48½ as leader." J. Hyatt Brown

Maintain Focus

‘The Company is in the insurance sales and service business. All business decisions must stay focused on Brown & Brown’s core operation. All growth must enhance the Company’s ability to sell insurance better.” J. Hyatt Brown

Small Headquarters

“Our corporate staff is lean but vigilant – therefore our overhead charge is very austere, particularly when viewed in comparison with some in our peer group.” J. Hyatt Brown

“For us, decentralization means operating with little overhead. In fact, with corporate operating expenses comprising just 3% of total revenues, we’re the leanest in our industry. Purely administrative positions are virtually nonexistent within our organization. From the executive office to customer service, everyone is responsible for sales and profitability.” J. Hyatt Brown

Community and Caring

“We're very community minded. Over 90% of our offices are involved in support nonprofits in their local communities.” J. Powell Brown

“We have a culture of caring. We truly believe that teammates want to work for a company that demonstrates they care. We care a lot. We have 90% of our offices really support local non-profits. We also have a disaster relief fund where we help provide support to our teammates and others across the communities who are in need of that help.” Julie Turpin

Summary

Brown & Brown stands as a remarkable example of how empowering individuals and fostering a strong culture can lead to exceptional investment returns. At the helm was CEO J. Hyatt Brown, a dedicated leader who spent over 50 years with the company—a true business fanatic.

The company's decentralized structure creates separate profit centers, allowing local teams the autonomy to make decisions and take ownership of their success. This entrepreneurial spirit not only encourages accountability but also thrives on internal competition, driving teams to deliver exceptional service to their clients. With 60% of employees as shareholders, there’s a unique mindset that comes from being invested in the company’s success.

Emphasizing a long-term perspective, Brown & Brown prioritizes sustainable growth over short-term gains, steering clear of the pitfalls of quarterly pressure. It’s the small, consistent efforts—the "Lollapalooza effects"—that lead to remarkable results. By valuing people as the core of their business, Brown & Brown cultivates a strong culture where ordinary individuals achieve extraordinary outcomes.

Ultimately, Brown & Brown exemplifies that in business, it’s all about people. The combination of a strong culture, empowerment, and a focus on the long game has solidified its status as a leader in insurance brokering, delivering outstanding investment returns along the way. Brown & Brown stands as a testament to the key characteristics shared by the great businesses we've studied.

Sources:
‘Brown & Brown - Annual Reports,’ 1999-2023.
‘Brown & Brown - 2008 Annual Report.’
‘A Different Kind of Mogul - J. Powell Brown,’ Ed Leefeldt, Leaders Edge, October 2010.
‘Simpkins Speaker Series - Hyatt Brown,’ Eastern Florida State College, 2020.

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