$23 Million and 275 Employees

Those are the numbers from Brown & Brown’s January 27, 2026, analyst call (as reported in the Insurance Journal on January 28, 2026) regarding the revenues lost to a start-up (likely meaning Howden) in 2025. Per the statements made on the call, most employees were not producers, and most were in benefits.

This fascinates me on multiple levels. First, Howden is making waves because of the many employees they’re allegedly taking from other brokers. In some cases, I find it funny because some of the aggrieved brokers were known for similar practices. But Howden’s taking of employees is at a level never seen in this industry. Marsh McLennan sued Howden over one event in which 140 employees left on the same day. It appears many large brokers have lost people to Howden. I don’t know the total number of people Howden has allegedly acquired in this manner, but my rough estimate is around 700! That is a lot of people to take from other brokers, much less in less than two years!

But the Brown & Brown statements, in particular, are fascinating. (I want to be explicit that I’m using Brown & Brown only because they publish their numbers and not because they are any worse or better than any other affected party.) Brown & Brown, per their 2024 10-K, reported 10,962 employees in their retail segment. They reported $2.7 billion in revenue from their retail segment. Therefore, $23 million and 275 employees are immaterial. It’s 2.5% of the employees and 0.8% of revenue. So why even make a significant point during the analyst call?

Their 2024 numbers suggest overall revenue per person is approximately $240,000. However, if $23 million was lost directly due to the departure of 275 employees, I am not sure I’d be unhappy, because those employees generate only $84,000 in revenue per employee. Or maybe employee benefits as a whole is a revenue drag? Or maybe revised numbers will be presented in this year’s 10-K? Also, why would Howden even want a group of employees who can only bring $84,000 each? I imagine there is more money at stake than $23 million.

More importantly, this battle is happening due to business models. It is cheaper to take employees and accounts and pay attorneys than it is to grow producers. In reality, this might not be the case, but given current accounting rules, investors can be misled into thinking it is cheaper. This is because firms that grow through acquisition do not amortize approximately 50% of the purchase price, with some not even amortizing a dime, making that part of the cost appear free on the income statement and, consequently, the all-important earnings per share (EPS). And the part that is amortized is amortized over a long period. Given the way many of these companies are structured, especially those with foreign domiciles, it is still often cheaper to buy and amortize the cost rather than develop producers.

And if a good producer exists, steal them because that is even cheaper than the sky-high prices buyers are paying. This is a good model by many measures.

If you are a carrier expecting organic growth from these entities, you are likely excessively optimistic or inebriated. An insurance distributor taking business like this, or buying agencies in a manner that hides the true cost on an EPS basis, is unlikely to have the focus required to generate material organic business, especially given the transition, bad will, and integration. Furthermore, they may not be able to afford to grow producers, and they have given up the skills and enterprise to grow producers.

And yet, carriers are paying these entities more money than other distributors, but to what end? Carriers would be wise to focus their money and energy on distributors that can grow organically, because as the market softens, they’ll go backwards if they don’t.

I suspect courts will rule mostly in favor of Howden if the cases aren’t settled first because the genie likely cannot be put back in the bottle. At 700 employees and an estimated $200,000 in revenue per person, they are already at $140 million in revenue in almost no time. The former employers would be nuts to take back their former employees, and the customers are not going to go back. They might go to a third broker, but they are not going back to the incumbent brokers. Some settlement will likely be agreed upon that is less than the 3 or 4 times revenue being paid for acquisitions. Even after legal fees, Howden will likely have executed a Machiavellian strategy well.

And last, a warning on acquisitions. It appears that some of the people leading departures may be former top leaders of acquired firms. Paying a lot of money to sellers and then having the same people leave, take employees, and millions of revenue in the form of accounts might be considered expensive, unfair, and ungrateful. When the only way a firm can grow is by overpaying for acquisitions that can be made to look inexpensive through financial engineering, and that model is damaged, expect a cat-in-the-corner reaction. The financial engineering unravels when they must declare an impairment as their purchased business runs out the door.

If you are a competing distributor, this is an excellent time to build a true organic growth strategy. Almost no carriers or distributors have true strategies (Howden, though, does seem to possess one!). A strategy must consider how the competition will respond to your actions. Virtually no insurance entity ever considers this in their “strategic” plans, so they don’t really have strategic plans.

Some employees are clearly ready to leave if poached, and many others are restless and uncertain. Now is the time to ask if they want a better work environment. Ask if they want to work in an environment where they can write new business. I like the idea of honoring their restrictive agreements while still taking the employees.

Customers are uneasy, too. Many are aware of these battles, and they do not want to be caught in the middle. They want a focused broker taking care of their needs. It is a great time to capitalize on the unsettled environment. Build your strategic plan and take action!

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