Andrew Watts: Hey, Greg, I also add to that. I think it’s important to think about what happens in the marketplace through the lens of the buyer, of the insurance, right? And rate, while that’s an important factor, that’s not the only factor that drives the buyer, right? Quite often they’re focused on the absolute dollar, right? Because you got to think about through their lens, they’re managing a cost in their P&L. And so there’s a lot of factors that they’re going to take into consideration. We’ve talked about this over the past few years, right? So if rates are going up, right, they’re probably adjusting their limits, they’re adjusting deductibles. And same thing can happen if rates soften a little bit. Well, that may allow them to maybe increase some of their limits or back and forth.
But think about it through the lens of premium, not just rate online. I know a lot of people are writing about this right now, but much — in some aspects it’s much more simple and much more complex than that.
Gregory Peters: Got it. Thanks for the detail and it’s glad to hear that you’re pumped, Powell. Thanks.
Powell Brown: All right.
Operator: Please standby for the next question. The next question comes from Mark Hughes with Truist. Your line is open.
Mark Hughes: Yeah, thanks. Good morning,
Andrew Watts: Good morning.
Mark Hughes: Andy, you say you’re going to adjust the numbers for the non-cash intangible amortization to be more in line with peers. If you had done that in 2023, how much would that have impacted adjusted earnings?
Andrew Watts: It would equate to about $0.45.
Mark Hughes: $0.45. Okay. And then the Benefits business. How did that perform in the quarter? Any kind of early feel on Q1? I know that’s a more important driver for organic in the first quarter.
Powell Brown: We’re very pleased with the way the business performed in Q4, and more importantly, for the year. So we’re very pleased with the way the Benefits business is working.
Mark Hughes: Okay. Thank you.
Powell Brown: Thank you.
Operator: Please standby for the next question. The next question comes from Rob Cox with Goldman Sachs. Your line is open.
Robert Cox: Hey, thanks for taking my question. Maybe firstly, on the reinsurance changes, did that have an equal $19 million impact to adjusted EBITDAC?
Andrew Watts: It’s pretty close on it, Rob. So that’s why when we said that — while we were down 40 basis points for the quarter, you can kind of run the math through. So isolating that, our margins would have been up quite well for the quarter, which we’re very, very pleased about.
Powell Brown: Can I also input something here, Rob, that you haven’t asked? You heard me say that the margins, if in fact that didn’t occur, would have been up 900 basis points — the — organic. Sorry, not margins. Organic would be up 900 basis points. The overall business, if you looked at it, would have grown 9.9%.
Robert Cox: Yeah, that’s great. Thank you. Maybe just as a follow-up. Saw E&S casualty pricing accelerated in the quarter, and we’ve heard a lot of commentary around potential reserve issues and casualty. So wondering if you could provide any color on what’s driving that pricing acceleration and if you think that could continue in 2024.
Powell Brown: Sure. So, Rob, I’ve only been in the insurance business now for 34 years. So I don’t have the scope and impact of knowledge that my father does at age 86. But I will tell you, since I started in the insurance business, the industry has been talking about the under — the inadequate pricing of casualty. That’s since 1990. And the industry has not done a very good job of being able to increase the price on casualty. So I think we’re going to continue to hear people on the risk-bearing side talk about the need for increased reserves and what that means is we need to increase prices and all that other stuff. But the simple fact is this, people are trying to balance their portfolios with the cap that they have in it.
And as a result, casualty premiums are long tail in nature, and they’re appealing. So I don’t think that they’re going to be able to get the pricing that they want or think they need, which is a nice way of saying that I would be surprised if you see a significant upward pressure on casualty pricing. They may talk about it, but I’m just saying that’s 34 years in.
Robert Cox: Got it. That’s helpful. And if I could follow up with one more, just on the employee benefit space, how are you thinking about the growth environment between pricing and employment growth? And if you could remind us what percentage of the business is commission based at Brown & Brown?
Powell Brown: Okay, so let’s talk about employee benefits. Remember, from an employee benefit standpoint, you have a couple things going on. You have, obviously, you would think when you add a new employee onto a plan that generally would increase the commission or potential fee or something to that effect. There is a segment, a smaller segment of that book of business where there’s sort of — it is an amount per employee and it doesn’t go up like a commission. So it’s like a price per head. So I think of it in a weird way it’s like a capitated plan a little bit. So it’s — that’s the first thing. The second thing is in our Retail business of roughly $2.5 billion, we have about —
