(Reuters) - Insurance brokerage Brown & Brown (NYSE:BRO) reported an 85% surge in fourth-quarter profit to $268.6 million on Monday, helped by higher commissions and fees alongside better investment returns.
The insurance industry typically enjoys stable demand for its products regardless of the economic backdrop, as policies are often guaranteed by employers while some are mandated by the government.
Insurance brokerages such as Brown & Brown serve as a bridge between an insurer and customers, helping clients find a policy which best suits their needs.
The company's core commissions and fees increased about 11.5% to $964 million in the three months ended Dec. 31.
Investment income surged to $18.5 million. The equities benchmark index S&P 500 closed up roughly 24% in 2023, helped by a stellar performance of mega-cap technology stocks and a broader year-end rally on bets the U.S. Federal Reserve had finished hiking interest rates.
Insurers also invest capital in rate-sensitive fixed-income products which have been delivering solid returns in the "higher-for-longer" interest rate environment.
Brown & Brown is one of the largest independent insurance brokerages in the U.S. specializing in risk management. It operates through four business segments - retail, national programs, wholesale brokerage and services.
The company said total revenue climbed 13.8% during the quarter to about $1.03 billion.
Brown & Brown posted net income of 94 cents per diluted share, compared with 51 cents a year earlier.
Shares of the company closed up 0.6% at $75.29 on Monday. The stock ended 2023 nearly 25% higher.
(This story has been corrected to fix the share price in paragraph 10)