Good morning, and welcome to the Brown & Brown, Inc. Third Quarter Earnings Call. Today's call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call, and including answers given in response to your questions, may relate to future results and events or otherwise be forward-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 third quarter, and are intended to fall within the safe harbor provisions of the securities law. 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 referenced 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 third 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 report filed with Securities and Exchange Commission. Additional discussion of this 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 in the investor presentation for this call on the company's website at www.bbinsurance.com by clicking on Investor Relations and then Calendar of Events. With that said, I will now turn the call over to J. Powell Brown, President and Chief Executive Officer. You may begin. Thank you, Laura. Before we begin, I wanted to say we apologize for any mix up. There was a transition from one calling or coordinating company to another, I think is how I would describe that, and we were just made aware of that about 15 minutes ago. We apologize for any inconvenience. Good morning, everybody, and thank you for joining us for our T hird Quarter 2022 Earnings Call. Before we get into our results, I wanted to make a few comments regarding Hurricane Ian. First, our thoughts and prayers go out to everyone in Florida and South Carolina that have been impacted by this massive storm. We have a number of teammates and their family members that suffered wind and flood damage to their homes. Thankfully, none of them were hurt. All the people in Florida and South Carolina that were impacted are in the recovery phase and will need a lot of help during the rebuilding process. We encourage everyone to support in any way you find appropriate. I'm extremely proud of how our team prepared for the storm by enacting our catastrophic events plan across our offices. We were ready no matter where the storm hit. This enabled us to respond quickly and support our customers as well as others in the impacted communities. Florida will recover and rebuild as it has after other storms. It's just gonna be a long road. Regarding our financial performance, we had another good quarter and delivered strong total and organic revenue growth for most of our businesses. Our margins and bottom-line results include estimated losses in our two captive facilities, as well as reduced contingent commissions in certain programs, both as a direct result of Hurricane Ian. We'll talk more about our quarterly results and the impact of the storm a bit later. We continue to anticipate good and profitable growth through the remainder of 2022. During the quarter, we completed the acquisitions of GRP in July and BdB in August. Both businesses have performed well and are in line with our expectations for their first few months. We're very pleased with the strong cultural alignment, the quality of the team, their strong operating results, and the prospects for the future. Now let's transition to the results for the quarter. I'm on slide number 4. We delivered $928 million of revenue growing 20.4% in total and 6.7% organically. Our Adjusted EBITDAC margin was 31.2% for the quarter. Our net income per share was $0.57, and our adjusted net income per share was $0.50. Later in the presentation, Andy will discuss our financial results in more detail as we have a number of items impacting the results for the quarter. We also completed 11 acquisitions during the quarter with annual revenues of approximately $340 million. I'm on slide 5. Let's talk about the potential impacts of Hurricane Ian. Based on what we're seeing with current claims, there's a lot of damage from wind, but the great majority appears to be flood related. As a result, we're gonna see material claims in our Wright Flood business. We're estimating somewhere in the range of 11,000-12,000 claims and anticipate this will drive about $11-$14 million of revenue. However, it's still too early to fully assess the total number of claims and the severity of each claim. Regarding 1/1 reinsurance treaties, they will be under significant pricing pressure. This will drive commercial and residential cat-exposed property rates up and will lead to increases in wind deductibles. This will present further financial challenges for businesses and consumers after 4 years of significant premium increases and the reductions in capacity. We're well-positioned to help our customers navigate these challenging times. During the quarter, we continue to see businesses in industries such as construction, manufacturing, and health care expand, even with continued downward moderation in GDP to more traditional levels. Inflation and rising interest rates are the key areas of concern. Some business owners are becoming more cautious about the level of investment they're making or the number of employees they're seeking to hire. Most employers are still trying to find workers, but some are reducing their hiring needs as revenue growth is slowing or the outlook is not as robust as it was 6-12 months ago. The carrier landscape remained relatively consistent with previous quarters, with rate increases being fairly similar. The main themes were availability of capacity or appetite for certain classes of coverage and enhanced underwriting rigor. Customers continued to modify their deductibles and limits to best manage premium increases. It does appear the market is getting to a level where customers cannot reduce their limits much more for certain lines, like excess liability, without either substantially dropping coverage or bearing the higher premiums. Admitted market rate increases were similar to prior quarters, were up 3%-7% across most lines, with the outlier being workers' compensation, which remained down 1-3%. From an employee benefits perspective, rates were up 7%-10%. From an E&S perspective, premium rates increased in the range of 10%-20%. Cat wind rates were up 15%-35%. Obviously, that's pre-storm. While earthquake rates were up 7%-10%. The impact of Hurricane Ian losses will put additional upward pressure on property rates in the fourth quarter. Rate increases for the first half of 2023 will then be influenced by the outcome of 1/1 reinsurance treaties. Early indications would suggest material upward pricing on cat property. The placement of professional liability and excess liability for many accounts remains challenging and were up 5%-10%. However, public company D&O rates were down 5%-20%. Regarding cyber, the story is substantially the same as with the last three or four or five quarters, with rates and deductibles continuing to increase and carriers requiring effective security protocols. Personal lines for property in California, Florida, and Louisiana continue to be challenging due to losses in aggregate concentrations. During the third quarter, we started to see increased underwriting rigor and reductions in capacity for Texas property. We expect carrier appetite in these markets will remain constrained. As a result, some additional accounts will move into state plans. Each state program will be under significant pressure due to the influx of policies and losses. On the acquisition front, the volume of deals in the third quarter slowed for the entire industry. However, we acquired 11 businesses with approximately $340 million in annual revenue, which is the largest acquired revenue quarter in our history. The slowdown for the rest of the industry was mainly driven by private equity reducing their activity as the increased cost of debt and the potential for the economic slowdown appears to be driving them to be more selective. However, if a business is considered to be a platform, private equity is still very aggressive on pricing. I'm now on slide 6. Let's transition and discuss the performance of our four segments. Our retail segment delivered organic growth of 5.1% as a result of good new business, solid retention, rate increases, and modest exposure unit expansion, but was partially offset by downward pressure within specialty lines. We delivered strong organic growth in our employee benefits business, solid growth in our commercial business, and we had some headwinds in our dealer services business due to the slowdown in auto and RV sales. National programs had another very strong quarter with organic growth of 14.5%. This growth was driven by an increase in lender-placed coverage as well as strong new business, good retention, exposure, and expansion across many of the other programs. The wholesale brokerage segment delivered organic growth of 4.5%, led by another quarter of strong growth in our open brokerage business. This organic growth was driven by solid new business and rate increases, but was partially offset by continued headwinds within personal lines. In addition, we had a specialty business that negatively affected our organic growth by about 200 basis points, which we sold in Q4 on October 1st. The organic revenue of our services segment declined 4.6%, with the main driver being the higher prior year weather-related claims. Now, with that, let me turn it over to Andy to discuss our financial performance in more detail. All right. Thanks, Powell. Good morning, everybody. We're over on slide number 7. Like previous quarters, we'll discuss our GAAP results and then certain non-GAAP financial highlights. For the third quarter, we delivered 20.4% total revenue growth and organic revenue growth of 6.7%. Our EBITDAC margin decreased by 460 basis points, primarily driven by estimated losses from Hurricane Ian that resulted in adjustments to our accrued contingent commissions and estimated losses within our captive programs, as well as higher year-over-year variable and healthcare costs and one-time integration costs. For the quarter, salaries and related and other operating expenses were impacted by the changes in the liabilities and assets associated with our deferred compensation plan. As we've mentioned before, when the market changes year-over-year, we realize offsetting movements within these expenses. As a percentage of revenue, the year-over-year benefit to salaries and related was approximately 60 basis points, and there was a corresponding offset in other operating expenses. Our net income grew 10% or $14.7 million due to approximately $27 million of adjustments we recorded for earn-out liabilities, and our diluted net income per share increased by 9.6% to $0.57. The effective tax rate increased to 26.1% for the third quarter of this year as compared to 25.5% in the third quarter of last year. Our weighted average number of shares was substantially flat compared to the prior year, and our dividends per share for the quarter increased to $0.103 or 10.8% compared to the third quarter of 2021. We're on slide number 8. This slide presents our results on an adjusted basis, which excludes the impacts of movements in foreign currencies on both revenues and expenses, the net gain or loss on disposals, the one-time acquisition integration costs associated with GRP, Orchid, and BdB, and the changes in earn-out payables. Please refer to slides 15 and 16 for reconciliation of these amounts to our most comparable GAAP measures. On an adjusted basis, income before income taxes decreased 11.8%, while EBITDAC increased by 5.8%, and Adjusted EBITDAC margin declined by 440 basis points from the prior year, which was impacted by the previously mentioned drivers. The incremental decline in adjusted income before income taxes as compared to Adjusted EBITDAC was driven by higher year-over-year quarterly interest cost of $25 million and higher amortization of $14 million, with both largely driven by the GRP, Orchid and BdB acquisitions. Net income for the quarter decreased by 12.5%, and adjusted diluted net income per share was $0.50. We're on slide 9. Our retail segment delivered adjusted total revenue growth of 25.1%, driven by acquisition activity over the last 12 months and organic revenue growth of 5.1%. Adjusted EBITDAC grew 12.7%, with EBITDAC margin decreasing by 310 basis points for the quarter, substantially due to higher variable operating expenses, the seasonality of profit associated with recent acquisitions, timing of incentive compensation and certain one-time cost. We view the margin decline for the third quarter to be isolated and are expecting good profitable growth for the fourth quarter and full year. We're on slide number 10. Our national program segment delivered adjusted total revenue growth of 21.2% and organic revenue growth of 14.5%. For the quarter, contingent commissions were negatively impacted by approximately $15 million due to the estimated insured losses associated with Hurricane Ian. We will also reduce our accrual for contingent commissions for the fourth quarter by approximately $4 million for the same reason. Depending on the severity of claims, it may impact our ability to earn contingent commissions for certain of our programs in 2023. Tom mentioned earlier that we expect to realize $11 million-$14 million of revenues for flood claims processing associated with Hurricane Ian. This is based on what we know at this stage regarding the number of claims and estimated severity. As we know more during the fourth quarter, our estimates may need to be refined. We're expecting to recognize about 60%-65% of the revenues in the fourth quarter of this year, with the remainder in the first half of 2023. Adjusted EBITDAC grew by 1.1% over the prior year, and our adjusted margin decreased 740 basis points to 36.8%. The decline was due to the decrease in contingent commissions and estimated losses of approximately $11.5 million in our captive facilities. These items were both driven by Hurricane Ian. In order to provide additional capacity to incrementally grow our cap programs, we started our first captive facility in January and then acquired another in connection with Orchid. On an annual basis, the losses on these captives are limited, and we are projecting good organic growth and margin. To date, both captives are performing in line with our expectations. On slide 11, our wholesale brokerage segment delivered adjusted total revenue growth at 12.3%, driven by recent acquisitions and organic revenue growth of 4.5%. Adjusted EBITDAC increased by 8.1% with the associated margin declining by 140 basis points, which is impacted primarily by higher broker commissions related to increased performance for our open brokerage business, increased variable operating expenses, and the seasonality of recent acquisitions. We're on slide 12. Adjusted total revenue on our services segment decreased 5.9%, and organic revenue declined by 4.6% due to lower claims from weather-related events. For the quarter, Adjusted EBITDAC decreased approximately $2.5 million, or 25.5% due to lower revenues. A few comments regarding liquidity and cash conversion. For the first 9 months of 2022, we delivered cash flow from operations of $600 million. Our ratio of cash flow from operations as a percentage of total revenues was 22.4% for the first 9 months of this year as compared to 27.1% in the first 9 months of last year. This lower ratio was due to the payment of earnouts as certain acquisitions have overperformed our original expectations, incremental interest expense, and paying higher incentive bonuses to our teammates for their outstanding performance in 2021. Overall, we are in a strong cash generation and capital position, finishing the quarter with $580 million of available cash. During the third quarter, we repaid $100 million on a revolving line of credit and plan to continue to delever over the coming quarters as we've done in the past post larger acquisitions. As a result of increasing interest rates, we are projecting interest expense for the fourth quarter to be in the range of $44 million-$46 million. Lastly, we still expect our full year Adjusted EBITDAC margin to be down slightly to up slightly as compared to 2021. This would represent a very strong performance for the year given the increase in variable costs as compared to 2021 and the impact of Hurricane Ian on our captives and contingent commissions. With that, let me turn it back over to Powell for closing comments. Thanks, Andy, for a great report. Overall, it was a good quarter, even with a number of moving parts relating to Hurricane Ian. We're very pleased with how our team is performing and have good momentum as we continue to win more new business and retain our existing customers. Regarding Hurricane Ian, there's still a number of unknowns that will play out over the coming months. The first will be the ultimate losses incurred by carriers and how these will impact their reinsurance programs. Second, there's uncertainty around how state plans will react. Based on the severity of losses, it will influence the 1/1 reinsurance treaties and pricing for all cat-exposed property. Capacity for commercial and residential property is going to become even more constrained, driving rates and deductibles even higher. For all other rates, we're expecting increases to be relatively consistent for the next couple of quarters. From an economic standpoint, we expect the Fed will continue to increase interest rates in order to cool the economy and reduce inflation. We will see how this plays out and what the ultimate impact on economic growth will be. We are well positioned to help our customers manage their risks and costs of insurance as a result of our broad capabilities. We wanted to reiterate how pleased we are with our international expansion. Our MGA in Canada is performing very well. Our retail business in Ireland is firing on all cylinders. Our recently completed acquisitions of BdB and GRP are well positioned for future growth. While still in the early days for GRP and BdB, we feel very good about this cultural alignment and along with their leadership teams and how we are all working together. While acquisitions this quarter were down in the industry, we do not see an overall long-term decline in brokerage M&A, even with the prospects of an economic slowdown. However, with increasing interest rates, we may see private equity sponsors adjust the multiples they're willing to pay. As usual, we're well positioned with a good pipeline and are talking with lots of companies. We will maintain our disciplined approach as it's worked well for many decades. In closing, we feel good regarding how our team is positioned and executing. We're attracting and developing talent and are investing in our capabilities for good long-term profitable growth. Based on our momentum over the first 9 months, we anticipate delivering a good fourth quarter and strong top and bottom-line results for 2022. With that, let me turn it back over to Laura for Q&A. Thank you. Once again, ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. We'll now take our first question from Michael Phillips of Morgan Stanley. Your line is open. Please go ahead. Thanks. Good morning. You talked a little bit about this in your opening remarks. I guess the extent that your clients are, you know, kind of buying less, it seems like that's more of an issue today than it was before. I guess I want to hear your thoughts on that and how widespread is that, you know, cost cutting throughout all your clients. Are they buying less now than what you thought last quarter, and what do you think about that going forward? Okay. Thanks, Michael. Let's talk about remember, if you think about some of this could be in cat-prone areas versus all other. Let's make sure we're clear on that, in terms of a property or casualty could be affected similarly in these areas as well. What we're seeing is if your umbrella, as an example, went up to a very, very high level in the last quarter or two or three, meaning the premium went up substantially, then what they may have done is buy a smaller limit of liability. If they bought a $25 million umbrella before, they might have bought a $15 million or a $10 million dollar. That same lower limit might cost the same amount as they paid last year. Okay. That's the first thing. The second thing is, and we haven't gotten there yet, but we're proposing or speculating that there are gonna be places, particularly in the near term, near term defined as 3, 6, 9 months, where property rates will go up substantially due to the storm impact. As you may know, the governor in the state of Florida has called a special session in early December to talk about the property environment, among other things, and how companies can, one, get off policies here if they can, or they may be given more direction around pricing and terms and conditions. But as you know, in the non-admitted market, it's freedom of rate and form. A lot of things in Tier One Countries are in that category. It's a little bit more of we're in a wait and see. We want you to be aware of it. We have seen it already on casualty. We think that it could also play out in property. There are also potentially scenarios in the property market where they will not be able to buy the entire limit. We haven't gotten that yet, but I mean, we're seeing indications of that where a market that provided, you know, a full tower, the entire total TIV, will now say that we only wanna provide $10 million or $25 million. That means the rest of the market either has to come in and support it, or they may not decide to support it, and they may have to buy something less than the total limit. It's early days, Michael, on that. Okay. Yeah, it makes sense. Thank you for those details. Second question separately is the national program, the contingent commission hit there. I mean, that obviously makes sense with the end. What's the, I guess, how do you think about the risk or of that continuing at the same level in fourth Q? Hey, good morning, Mike. It's Andy here. When you say going forward the same rate, I guess what we Well, you'll see as much headwind in contingents that you saw in third quarter. Could that spill over into fourth quarter? Yes. Let me clarify a couple things just to follow up on this one. One of the, in our prepared comments, we said that we're anticipating gonna reduce our estimated accrual in the fourth quarter by about $4 million for contingent commissions. Then the $15 million that we have adjusted in the third quarter, keep in mind, that's for the 9 months. That's the year-to-date impact. Somewhere in the range of about $12 million or so was for kind of the first six months of the year. Yep. Okay. Yeah. Okay. Thank you, Andy. Thank you. Thank you. Thanks. Thank you. We'll now move on to our next question from Gregory Peters of Raymond James. Your line is open. Please go ahead. Yeah, good morning, everyone. Great. The first question I'd like to focus on just on the revenue side. You know, there's a lot of moving parts in your comments, and just trying to understand where we are in the balance between rate and exposure. I feel like that's changing and its impact on organic. I know you just commented about profit, you know, the contingent commission for the fourth quarter, but you also previewed in your comments, Andy, that there could be some risk to fiscal year 2023, and I was wondering if you could give us some more color on that. Okay. Why don't I start with rates and exposures? Greg, as you know, we've historically said that our business is kind of a reflection of the middle and upper middle market economy. Historically, it's been two-thirds exposure units, one-third rate. That's a very kind of good model. What I would say to you is, I'm not gonna say that it's vastly different than that now with certain exceptions. When you get into offices that write a lot of cat-prone property, that could be in Texas, that could be in Louisiana, that could be in Florida, that could be up the coast of the Carolinas. Those offices, particularly, and there's some seasonality in terms of the amount of property that are written in certain quarters. As you know, you don't have a lot of property written in wind season. They try to move it out of it. You could have a bigger impact of rate in those offices. You could compare Fort Lauderdale, Florida, with Nashville, Tennessee, and Nashville, Tennessee, would be the opposite direction. It would be less than a third in rate. There's a little bit of a balance. Again, I can't tell you exactly the amount, Greg, but it's a little more than a third now, but it's not as much as you might think. You mean a little more than a third rate at the moment? Yes, that's correct. versus exposure. What I'm trying to say is I don't think rate is a half, but I'm saying in certain offices it could be a half. Got it. You want to talk about it? Yeah. You were going to comment on the contingents. Yeah. On the contingent, we made this comment earlier. I think one of the items that we don't know right now is depending upon the severity of and the total losses on some of the programs that we have. They have a carryover calculation inside of them. That may, as a result, knock us out of earning contingents in 2023. We don't know yet. Just want to get that out on everybody's radar. We'll know more over the kind of the next quarter, potentially into the next two quarters. Once they do calculations, we let some of the dust settle on this thing. You at least have an idea as to what the impact was for 2022. If it all got knocked out for 2023, it'd be in a similar range. Greg, I want to point out one thing that I know you've already thought about and everybody else on the call, but there are some very large numbers that are being tossed around in terms of total loss. I know that you know there's a difference between the total loss and the total insured loss. One of the things that we're seeing in the impacted areas is we're seeing a number of homes, as an example, that are damaged by flood where they weren't technically in a flood zone, and many of those people don't have flood insurance. I just mention that because when Andy and I are saying we aren't clear on the impact, I don't think anyone is clear on the impact because of what losses are actually insured losses yet. We're in that process. Got it. There's a lot of information coming out of Tallahassee, so I totally get it's a fluid situation. Can I pivot to the margin for my second question? Because, you know, I was trying to go through, and I recognize your guidance for the full year, Andy, but I was trying to reconcile, you know, some of the items that you called out in your press release, and I'm still coming up short on a year-over-year basis. Maybe, you know, you can help us. Some of the items are pretty clear. Maybe you can help us, you know, quantify some of the items that are less clear as to the headwinds in the margin in the third quarter. Well, let's see if we can go through a few of those. We didn't break all these down in granular detail for it, Greg, but I know we talked about the seasonality of some of our recent acquisitions. As we mentioned in previous calls, we'd anticipated the revenues and profit would be relatively even across all the quarters, but again, didn't know exactly how that will fall. We still feel really good on a full year basis for all the acquisitions. They're just gonna have a little bit of movement, so that had some impact during the quarter. Again, we took that into consideration when making our comment about the full year and the fourth quarter. We did have some timing just on when some expenses got recorded during the year, and those can always just kind of move around by quarters based upon performance and when people are hitting individual tiers inside of there. Again, it doesn't really change the full year perspective, but it will wrap the quarters for us. We just had a number of kind of miscellaneous one-time items out there. Again, we normally don't break one-time items out unless they're really big in nature. When we kind of look at those, we felt good with the underlying performance on the business for the quarter and what it looks like for the fourth quarter and for the full year. Got it. Thanks for the answers. Yep. Thank you. Thank you. We'll move on to our next question from Robert Cox of Goldman Sachs. Your line is open. Please go ahead. Hey, thanks for taking my question. Florida property pricing increases will be a benefit in Florida in the coming quarters or years, but there are some associated headwinds with the reduced capacity and business going to state funds. I'm wondering if there's a scenario where Florida growth actually becomes a headwind at some point. You know, if that's a possibility, what you think the probability of that scenario happening is. Okay. Robert, I think that the probability is low, but it is a possibility. You're tapping on something that is possible. What I would tell you is in 2007, our then governor, Charlie Crist, who is running for re-election, right now against currently Ron DeSantis, our existing, our sitting governor. He took the market of last resort in Florida, the Citizens Property Insurance Corporation, and made it the most competitive market in the state of Florida. That, in turn, it was a headwind for us in 2007. That said, there are more policies in Citizens today. Citizens is backstopping some of the Florida takeout companies today. We don't know what the loss picture of Citizens is today in terms of surplus that will be exposed. The answer is it possible? Yes. I think it's a low probability. I don't think you live here in Florida, but there's a unique dynamic going on in Florida right now, which is we have a gubernatorial election that'll happen on the 8th of November. You have a governor who has aspirations beyond the state of Florida, and he is going to try to continue to manage the property market for the benefit of the customers in Florida in a difficult scenario. There will be lots to watch in probably the coming short weeks and months. We're not, like I said, I think it's a low probability. The other thing that I wanna make sure that everybody knows is in 2007, the percentage of Florida business overall for Brown & Brown was substantially higher than it is today. We've talked a lot about being a very diversified, now more international company. 12% of our revenues going forward will be international, and I would say around 15% of our business is in Florida. and not all of that is property. I wanna make sure that the impact then was different than the impact today. Also, not only are we more diversified, but our capabilities are much more enhanced today than they were, you know, 15 years ago. Our ability to work with complex property schedules and bring even more effective solutions to our customers and our prospects, I think that we're very well-positioned. Thanks for the question. That's really helpful. Thank you. Then just on group benefits, the 7%-10% increases in pricing is higher than I would have expected. Can you just talk about what's driving that and if the commission structure there is similar in terms of weighting to revenues as P&C brokerage? Yeah. Let's start with saying that, I think if you're gonna make a broad statement, we are seeing increased medical claims post-COVID in all sizes of accounts. It could be a group of 12 people, it could be a group of 120 people, or it could be a 12,000-life group. You're seeing more, so there were delayed medical services that are being. There's like a catch-up. That's the first thing. The second thing is, no, it's not as easy as, let's say, P&C. Remember, in small group, let's call it, you know, broadly defined as under 100 lives on an insured plan, that's fully insured, those are many times paid on a per employee per month. If you add another employee, you would get additional commission, but the increase in the price of the overall plan does not impact our revenue growth. That's number one. Number two, there are lower commissions because the premiums are higher as a percentage on fully insured and in some instances, self-insured business, from 100 lives and up. Then there are certain segment of our business where it's a fee-based above in the really large accounts. Typically, it's a fee-based for services rendered. That's how I would see it. The health plans that we see, which we see a lot of them all around the country, there's regional nuances about how people consume healthcare. They think about healthcare, they think about the plans they want in healthcare, and so all of that drives expense. Yeah, Rob, keep in mind when we make the comment in there also that includes pharmacy cost. Yeah. Pharmacy costs are probably, not in all cases, but in many cases, they're actually outpacing healthcare costs today because of specialty drugs that are in there. It would not be uncommon to see pharmacy costs running in the double digits on increases year-over-year. You have to kind of take that into consideration when looking at the overall structure of the plan and the pricing of the plans. Great. Thanks. Thank you. Thank you. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll now move on to our next question from Elyse Greenspan of Wells Fargo. Your line is open. Please go ahead. Hi. Thanks. Good morning. I was hoping to go back to the margin discussion. You know, I know you reaffirmed the guidance, right, for the year, which, you know, implies like the good side, right, potential, you know, flat to some margin improvement, which seems to imply that things should go pretty well in the fourth quarter. Is that just some of the seasonality that went against you in the third quarter reversing itself in the fourth quarter with some of the deals, et cetera? Can you just help us think through, you know, what should help your margin in the fourth quarter relative to the full year guide? Yeah. I think morning, Elyse. Yeah, it'd be a few of those items inside there. Part of it would be the seasonality of the business on some of the recent acquisitions. There's also just the seasonality of the amount of property that we place in the fourth quarter. You saw that coming through in retail. You know, Powell mentioned that earlier, just significantly less than the third quarter, which would make sense with hurricane season that's out there. We just have kind of normal timing of expenses throughout the year. Some of them we had in the fourth quarter last year, some of them this year. When we put all that together, we feel really good about the outlook for the fourth quarter on the organic and profitability. That's where it got us back to reaffirming the guidance. Okay. In terms of your captive, since you guys took a loss there this quarter, can you just provide, you know, some more color? Is there underwriting risk that you guys are taking there, the retention? Do the assumed premiums flow through your organic and revenues from the captive? Let me try to hit those multiple questions there. We have a very limited exposure in terms of our captive risk. That amount we have pretty much exhausted in the losses. Isn't that right, Andy? It is. Let's see if we can. The way you wanna think about those, Elyse, is it's difficult to look at them on a quarterly basis. Yeah. Because what we're doing is, and you're right, we are participating in the underwriting risk to an extent. It's very limited in nature, and it does help us drive organic growth across our wind and property programs. When there are events, you're gonna see kind of the ups and downs in the business. Could be if we had a quake in Q1, we'd record losses and nothing else during the year, then, you know, we'd have higher margins in the business. We need to look at those, or we look at those on a 12-month basis, and feel really good with the programs and the growth coming off of them as well as projected profit. We're not in a situation where we're actually losing money, so just wanna clarify. We're not losing money, it's just we're recording losses in the quarter for the captives, but they're right in line with what we expected. The other thing that you said, Elyse, about organic growth, any additional capacity that we get can translate into organic growth in our programs. Whether that's our captive-provided capacity or additional capacity from a risk bearer, either one of those translates into organic growth for the program and it would be reflected in national programs. Okay. So- Oh, sorry, go ahead, Andy. Yeah, I was just gonna say, Elyse, so when you look at the program's growth for this year, that is part of what's giving us the incremental organic growth. We would not expect to get as much incremental growth off of the captives next year, just because it's a first-year startup, and then we get into next year and we'll have a little bit of additional premium and probably some rate inside of there. So that'll moderate some of the growth in national programs going into next year. Okay, thanks. One last one. I know you guys had provided, you know, updates on the revenue that you expect from those, large deals. I didn't see any disclosure this quarter. Does that mean it's, you know, in line with what you guys had told us, with second quarter earnings? Yeah. It's down a little bit because of where FX has moved. From the previous numbers that we had talked about, and again, the FX rates are moving around quite a bit. They're down, I think, about 8% from where we were before. We'll see what it plays out in the fourth quarter for us, and they may go back up into that range. One of the, I guess, maybe a little bit of the challenge is why we're trying to break these out. Because we haven't made a lap all the way around, it's hard to call out what the actual FX year-on-year in, because there is no year-on-year FX right now. It's just based upon what we estimated. If you wanna use 8%, that probably seem fair for right now. It more than likely it's gonna move in the fourth quarter, and we'll try to give color on that at the end of the quarter. Okay. Thanks for the color. Thank you. Hello, Laura. Okay. Laura, do we have the next person up? Who is this guy? Hello, Laura? All right. Well, we may take a pause for just a moment. She says she's speaking, but we can't hear her. Okay. We can't hear her. Can we go ahead and put the next person into the queue for questions, please? Hello? She said she's opened the line for Mike, but we can't. We can't hear anyone here. Hey, it's Mike Zaremski. Can you hear me? Hey, Mike. How you doing? Yep. There we go. All right, we got you, Mike. Okay, good. I just guessed because I heard someone say Mike. Thanks for taking the question. Quick follow-up on the contingents discussion, and appreciating, you know, that it's early days in terms of sizing up ultimate insured losses. But is there, you know, I don't know, a number out there like insured losses that you guys are using, you know, $30 billion or $50 billion, something we can kind of think about in terms of sizing up, you know, where the contingent discussion could go in future quarters? Sorry, Mike, we don't. It's too hard to estimate. What we're just trying to do is to be very mindful of the insured losses that are impacting, one, our customers, and two, as we hear of other large losses, how that may play into the mix in the market. No, we don't have an estimate there. Yeah. Okay. Mike, just keep in mind, when we do these, many of the programs, they're, you know, a relationship with one carrier, maybe a couple carriers. It's not like these are spread across, you know, 50 carriers, so you could take a broad-based industry approach. This is very focused. That's why I said, we just need to see how this plays out over the next, you know, 90-180 days, and then we'll have a much better view. It's just so hard to tell right now. Okay, got it. I thought I'd try, and it makes sense. The revenues that you expect to come in from Wright Flood, should we just look at kind of how it hit the bottom line in terms of kind of margin in prior catastrophes, or is there any nuances we should be thinking about due to this catastrophe due to Ian? Yeah, it's probably at least a reasonable start. You'd more than likely you wanna probably put some sort of an adjustment for inflation in there just because of what the cost of field adjusters are today versus what they were, you know, a couple years ago. Probably wanna, you know, haircut that a little bit. Okay. Got it. Yeah. I guess just stepping back. Oh, yeah, sorry. Go ahead if you- No, no, go ahead, Mike. Go ahead, Mike. I guess just stepping back, I feel like the captive impact this quarter caught some folks by surprise. Just wanna maybe learn a little bit more about it. Is this an impact we should, you know, be thinking about kind of on a forward basis whenever there's a large catastrophe? Is it kind of nationwide E&S? I know you mentioned earthquake or is it kind of more Florida or, you know, any geographic kind of color or anything you could provide too so we can think about this in the future? Sure. Mike, the way I'd want you to think about it is this: It is, first of all, limited to two of our national programs currently. Those are a wind facility that writes countrywide and an earthquake facility, which is predominantly in earthquake areas, which is really California and the West Coast predominantly. Having said that, we have an enormous amount of data on those two programs. The answer to your question is yes, national, currently restricted to two facilities, quake and wind. We have a lot of data on them and feel really good about the participation and how they are operating. As Andy said, in light of the losses that we've called out in this quarter, we still don't believe that we will lose money on our captives this year. Again, it's a very limited amount of risk that we're taking, and it has helped us build additional capacity to grow and support those two programs, which has performed really well. Yeah, Mike. Thank you very much. Yeah, Mike, because of the potential volatility by quarter, that's why we wanna call out the $11.5 million. Let's just, if you play forward a scenario, let's say there's no weather related events in the third quarter of next year, then, you know, you're gonna see the profitability margin jump up from what we saw this year. Same thing could happen in Q1 if there's a quake. That's why we thought it's helpful to break it out by the quarter so you'll have an idea kind of from a quality standpoint on how to adjust those. We figured that there's gonna be some sort of events throughout a year. That's why we say it's working almost exactly the way that it's modeled. We did a tremendous amount of work on this one. Thank you. Thank you, Mike. Okay, Laura. We can't hear you, Laura. Can you just put the next question in? Yeah. Hey, Weston. Are you on the line, sir? Hey. Yes. Can you hear me? Yep. Go ahead. Go ahead, Weston. Oh, great. My first question is a follow-up to Elyse's just on the growth that you're seeing from your recent large M&A. I know you said most of that deceleration was FX. I just wanted to confirm if there's any also slowdown, maybe in exposure, just given the recessionary environment that we're seeing in the U.K. and Eurozone. Just wondering if you could also just expand on the growth that you're seeing in that market given the recessionary headwinds. Again, as you know, we don't disclose organic growth in the first year of an acquisition. However, it is performing in line with what we anticipated, number one. I would be remiss if I didn't say that, you know, they've got 10% inflation in the U.K., so we're very mindful of that and how that's impacting salaries and related for insureds or even our teammates, and related. As you know, they have had a lot of excitement in the last 6-8 weeks there relative to their Prime Minister, and now they have a new Prime Minister. There's a lot of speculation on what will be done to help curb the impact on small and medium-sized businesses in the UK, and we're waiting to hear what the new Prime Minister will obviously say about that. Yes, we're starting to see an impact, but the growth and the performance of the business is in line with what we've thought. Great. Thank you. Just a follow-up on the growth that you saw in retail in the quarter. I know you called out some headwinds with dealer services and auto, but did decelerate somewhat meaningfully just year-over-year. Is there any ways that we can think about growth in the 4Q? Was there any seasonality to the business that we should be thinking about or anything else one-off for the fourth quarter? Yeah. Hey, good morning, Weston. Andy here. Maybe give a maybe just a little bit of perspective on the organic growth by the quarter. If we look back to last year on retail, we were 9.8%, 17.6%, 8.3%, and then a 9.5%. It does move around between the quarters, and some of that is the seasonality in the business. Looking at it year-over-year, at least from the quarter, that's probably more impacted by the dealer services versus the consecutive quarter, you know, Q3 versus Q2. That was much more around the seasonality of the property. Great. Thanks for the color. Thank you. Next question. We'll move on to our next question from Meyer Shields of KBW. Your line is open. Please go ahead. Great. Thanks. Good morning. Morning. Two quick questions. I think, Powell, you mentioned a 2% negative impact in wholesale or 2% negative organic growth impact in wholesale from a business that was sold. Is it because of the sale or is it just that this business was an offset to organic growth? Let me put it, let me restate it the way I would state it. In light of that not being part of our results, we would have grown 6.5% in Q3. Does that answer your question? Yes. Yes. Okay. No, that's helpful. When during the year do you actually obtain the reinsurance capacity for the captive? I'm asking because there's a lot of commentary about some attachment points not being available in 2023. Right. I was hoping to get your thoughts on that. Okay. Remember, we do not own a reinsurance brokerage operation. Okay? There might be some other firms that you follow that have reinsurance brokers. I'd like to kinda give sort of a 101 on the process. There is reinsurance for reinsurers. That's called retrocessional, the retro market. There is a lot of speculation that there's $20+ billion of shortfall in the retrocessional market for reinsurers. That's the first part. Reinsurance is sold typically through reinsurance brokers to primary carriers. The reinsurance carriers are currently saying, as you probably already know, that they're looking to their rates may go up up to 50%, and their attachments or their retentions could double. If you have a 1/1 reinsurance renewal, and you're a primary carrier, which you can pick anyone you want, I would guess that their reinsurance renewal would go deep into December before they finalize everything because of the disruption in the marketplace. That's how we would want you to think about it. Okay. That's helpful. A final quick question. When you talk about the $4 million adjustment to contingent commissions, is that the bottom line number, or is that the offset you'd expect to other contingent commissions that would be accrued in the fourth quarter? Yeah. Morning, Meyer. That would be offset in revenue within the profit-sharing contingent commissions. Okay. Not bottom line. Got it. Thank you. Thank you. Once again, if you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll take our next question from Mark Hughes of Truist. Your line is open. Please go ahead. Yeah. Thank you. Andy, anything you can say about the specific accretion or dilution from the acquisitions in the third quarter? We didn't break out the amount of the accretion from them. They were positive on EPS, which we anticipated that they would be. That was in our comments that we made, Mark, that they're kind of right in line with what we thought for their first, I'll call it 90 days, not quite exactly 90 days, but pretty close for both of those. You know, we've obviously got the cost of the debt and the amortization, but the businesses are doing well for us. Powell, just reflecting on where you've seen environments in the past where there's been a lot of dislocation in coastal property and in Florida, it's generally been accretive for growth for Brown & Brown. Understanding there's a lot of moving parts, you said it's a low probability it would be a negative. Just generally speaking, is this an environment that one might not hope for clients to have to pay more for insurance, but your services are valuable and therefore it positively impacts growth or otherwise? Right. I mean, first, Mark, this is why we're in the insurance business, which is to serve our customers after a loss, particularly a covered cause of loss. There's a lot of, you know, working through complex claims issues on their behalf to get their claims settled, not only fairly, but as quickly as possible. That's the first thing. The second thing is in an environment which you might describe a little bit as chaotic, there creates great challenges and great opportunities. I put that kind of in, you know, one big bucket. What do I mean by that? You're gonna have existing customers that are gonna be impacted by rate increases and deductible increases. Then you're gonna have lots of new business opportunities because there will be other firms that are not able to think about or provide the most creative solutions or that might translate into, in some instances, the most affordable solutions. I'm not trying to avoid your question, but what I'm trying to say is, in this environment, I would describe it as a potential positive overall, yet it comes with an enormous amount of work. That's, you know, additional stress on our teammates, stress on our customers, stress on the carrier partners we're dealing with in order to kind of, you know, deliver for them. Yes, I think you're thinking about it the correct way, and this is not a Florida only thing. I want you to keep that in mind. This is a coastal thing. This is a cat property thing. This is things that people think about differently. How do losses in wind impact the way carriers think about quake? You might say, well, they're totally unrelated. The answer is, technically they're unrelated, but they're still in a portfolio of risk that people assume. If you haven't had a quake loss in a long time, then one day there'll be a quake. I want you to please remember, first of all, we feel really good about our capabilities as a company, where we're positioned, the way we've invested in the business and our alignment with our entire leadership team. That said, it's not a Florida only challenge. This is. We're gonna see this in lots of different places. Thanks for the question, Mark. Thank you. Appreciate it. Thanks. We'll take one more question, Laura, please. Sure. We'll now take our last question from Yaron Kinar of Jefferies. Your line is open. Please go ahead. Good morning, and thanks for fitting me in. I want to start with going back to the seasonality of the acquired revenues. I guess, what quarters do you think will be the catch-up quarters? Is it more of a first quarter that's gonna be a big quarter? Good morning, Yaron. It'll probably get spread over kind of the fourth quarter of this year and then, you know, first and second of next year. It does get kind of spread over the three quarters. Again, it's not anything that is, you know, super material. As we talked about before, it does move around a little bit. It's not like we're gonna lump it all into the fourth quarter, all into Q1. It'll probably get kind of spread out. Okay. Is that true for both the retail and the wholesale segment? Because it seemed like maybe wholesale had more of a seasonal impact. Yeah, I think that's probably a fair comment that it's across both of the businesses, a little bit more accentuated in wholesale 'cause of the property. Okay. I hesitate to end a call with this, but, considering that, you know, you're not only an insurance broker, but you're also an employer that is based in Florida and you live in Florida. With all that, how are you thinking. Like, if you're talking to politicians in Florida, like what is your recommendation? How are you thinking about the potential property insurance problem in Florida? Okay. You're on to start, and I want to reiterate something that I said earlier. The first thing we think about is were any of our teammates and their family members affected in terms of injured by the storm. We said, no, okay? That is not the case in the entire state of Florida. There were a number of deaths in the storm. That's the first thing. To answer your question, the way we think about it is how you have a viable residential and commercial property market in the state of Florida knowing that there can be two competing interests there. If you look at it from a consumer advocacy standpoint, that may not make financial sense. There's got to be a balance there. Now, I also think that there's gonna be a lot of speculation around flood in Florida. What that means going forward, we don't know. There are numbers of people that their homes were flooded, they're not in flood zones, and they're uninsured. We don't know if FEMA will respond in some way to those individuals, but it's a big number. I think it's a very delicate balance between wanting to have a viable, competitive property market in Florida, which it can happen. With having said that, with consumer protection and giving them. Because remember, we have an election here on the 8th. You know, it's not just about the election on the 8th, it's about what do people think about and aspire to down the road. Lots of people are moving to Florida, and so affordability of insurance is top of mind. I think they're gonna have to give it some real significant thought about how you craft something that would be deemed a win-win as opposed to one side winning and the other side, whatever the other side is, whether that's the consumer or the carrier, because that is a very fine line right now. Remember, carriers were already evaluating capacity and potentially restricting capacity in cat-prone areas prior to the storm. This wasn't just storm related. This was an accentuation of something that was already happening. Does that answer your question? Right. Yes, it does, and I appreciate the thought. Maybe if I could sneak just one last one in. I think you're reiterating the margin guidance for full year 2022. Mm-hmm. Slightly up, slightly down. I think first three quarters, you're down a bit. Are you saying, is that guidance an absolute guidance or are you saying but for some adjustments? No. What we were saying is if, on a full year basis, we think down slightly to up slightly, which is the same guidance that we provided at the beginning of the year, Yaron. That includes the losses that we recorded on the captives as well as adjusting the contingent commissions. If you were so inclined, you know, if you wanna back those out and look at it, you know, separately, then obviously the margins look better, but we just try to look at it all in the total. Perfect. That's what I was getting at. Thank you. Yaron, I'd like to add one final thing as we wrap up. I know that was your last question, but I think it's important that we're very consistent in what we've said over long periods of time. Number one, we don't believe one quarter starts a trend. That's number one. Number two, we don't focus, although we report quarter-to-quarter results, we focus on performance over more of an extended period of time, like years. As Andy said, and I've alluded to in my remarks, we're positive. We believe we will finish in a very good place at the end of the year, particularly under the circumstances, both from a growth standpoint and a margin standpoint. We acknowledge that the economy is gonna continue to have pressure and headwinds because the Fed will increase rates. We're very optimistic about our business, and most importantly, we have great capabilities and better yet, great teammates. Our teammates are doing their very best to deliver for our customers and those that were affected in particular, but all over the country and overseas. We appreciate everybody's time. We apologize for the slight delay or mix up in the beginning, and we look forward to talking to you all in January. Laura, thank you very much and have a wonderful day. Thank you very much. Ladies and gentlemen, this concludes today's call. Thank you for joining. Stay safe. You may now disconnect.