Powell Brown: No, I don’t want you to think about it that way. This is kind of how a lot of people — well, I shouldn’t say that. I think some people think about the brokerage space. One, it’s a GDP plus or minus, but plus growth business, whatever that is. And so then you have to think about what does inflation do to impact GDP. And if you think about that a little bit. It’s sort of kind of baked into how our business operates. But please don’t lose sight of, the impact of inflation and rate over a long period of time, and when I say a long period of time, I’m not talking about a year. I’m talking 10 years, 20 years, 30 years in our business, we would say in a more steady state economy, it’s two-thirds exposure unit, one -third rate.
And those exposure units, whether they go up or down because of economic impacts, inflation or all of the above, we just have to continue to execute and sell more new business and keep the business that we’ve got. That’s how we think about it.
Brian Meredith: That’s really helpful. Thank you. And then my second question. I’m just curious, what are you seeing with respect to the standard markets, just appetite for some of the E&S type risks. I understand there is — as you mentioned Texas and certain areas are still pretty challenging. But are you seeing any of the standard markets just kind of trying to encroach back into the Wholesale arenas?
Powell Brown: So the answer to that is no. What I would tell you is in the last, probably half of the year, but even in Q4 and into this — going into the first part of this year, I think there continues to be an evaluation by admitted markets of segments of their books of business. So let’s just look at it in three segments kind of like our business. So in Retail, they’re basically looking at their CAT exposure and their loss profile, even on casualty and executive liability, and they’re saying, what do we need to get off? What do we want to write more of? That’s good. That sort of the impact there would be CAT capacity. If you go to Wholesale, generally speaking, those admitted carriers with their wholesale markets, you would think that they’re growing and they could be growing substantially as a percentage, but it’s a small portion of their overall premium.
And then third in Programs, regardless of if it’s CAT or casualty, they continue to look very closely at the profitability of those programs. And I have heard or seen a number of markets backing off programs that are not meeting their criteria for profitability. And so I believe that there’s going to be a broad statement. There will be some more changes in the Program space because markets will continue to review profitability of lines of business because their results are going up and they’re trying to bulletproof those for a long term.
Brian Meredith: Thank you. That’s really helpful.
Powell Brown: Yeah.
Operator: Please standby for the next question.
Powell Brown: And, Michelle, we’ll take one last question. Okay?
Operator: Thank you. Our last question comes from Grace Carter with Bank of America. Your line is open.
Grace Carter: Hi, everyone. Sorry about my technical difficulties earlier. I just had one that I wanted to really touch on. I’m sorry if I missed this earlier, but I was curious if you all have shared an outlook for investment income next year and how that factors into your expectations for slight margin improvement.
Andrew Watts: Morning, Grace. It’s Andy here. No, we didn’t give a — an outlook on investment income. So we weren’t going to try to hypothesize or predict what will happen to interest rates, at least for the — all the governing banks and the markets that we operate in inside of. We figured you guys are pretty well positioned to come up with your own determination that’s there, because some of it also is based upon just the amount of capital that flows through the organization and what we hold during the year. So those pieces can move up and down.
Grace Carter: Thank you.
Andrew Watts: Yeah. No, thank you.
Operator: I show no further questions at this time. I would now like to turn the call back to Powell Brown for closing remarks.
Powell Brown: Thanks, Michelle. We appreciate everybody’s time this morning. I was surprised we didn’t get one question. So I will ask the question and then I will answer it. You know at Brown & Brown, we’re a very goal-oriented company. We set goals. We achieve those goals and then we set a new goal. 12 years ago, we were roughly $1 billion of revenue and we set a goal to get to $2 billion in revenue. And in seven years, we took it from $1 billion to $2 billion. Then we set a new goal which was bring $2 billion to $4 billion. And five years hence, we actually went from $2 billion to $4 billion. Now we’re setting a new goal of $8 billion in revenue. Somebody would have asked, when are you going to get there? And the answer is, we don’t have a timeframe.
And the reason I say that is if we wanted to be $8 billion of revenue, we could go out and do that, but it would not be in the best interest of our shareholders, which in turn, 22% of the company is owned by teammates. So there is incredible alignment in our organization in terms of our long-term goals and objectives. As you heard in Andy’s remarks and my remarks, we are very pleased with the performance of 2023 and we are equally excited about the prospects for ’24. We also know that at some point the economy will slow down. All right. So we acknowledge that. But it seems that that probably will not happen in the near term is that the next six to 12 months. I think one of the things that’s buoying that is the presidential election. But there’s a lot more that goes into that.
So you’re not going to want to have changes if you can help it in the economy. It will be interesting to see what the Fed does with interest rates and how all that translates into the business environment. With that said, I’d like to say thank you again. We are pumped about our business and the future at Brown & Brown on our way to $8 billion, and we look forward to talking to you next time. Good day and good luck.
Operator: This concludes today’s conference call. Thank you for participating. Have a wonderful day. You may now disconnect.
