Good morning, and welcome to the Brown & Brown, Inc. first quarter of 2017 quarter earnings conference call. Today's call is being recorded. 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 first quarter of 2017, and are intended to fall within the safe harbor provisions of the securities laws. 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 first quarter of 2017, 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 reports filed with the Securities and Exchange Commission. Additional discussion of these 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.
With that said, I will now turn the call over to Powell Brown, President and Chief Executive Officer. You may begin.
Thank you, Shannon, and good morning, everyone. Thank you for joining us for our first quarter 2017 earnings call. I'm on slide four. For the first quarter, we delivered $465.1 million of revenue, growing 9.6% in total and 3.5% organically. Our total revenue growth includes a $20 million legal settlement that we had with AssuredPartners for the first quarter of this year. Our EBITDA margin increased 10 basis points from Q1 of 2016 on an as-reported basis. Our adjusted EBITDA margin decreased 270 basis points from the prior year, when excluding the net amount of $18.8 million associated with the legal settlement. Andy will go into more of this later. As our reported earnings per share for the quarter increased to $0.49 for the first quarter, our as-reported earnings increased to $0.49 for 2017 from $0.44 in the first quarter of 2016.
When excluding the change in estimated acquisition earn-out payables from both years, along with the net legal settlement and adjusting the prior year for the impact of adopting the new GAAP guidelines or guidance for stock-based compensation, our earnings per share decreased 4.4% to $0.43 on an adjusted basis. Overall, we feel Q1 was a good quarter as our organic revenues growth improved nicely and we continued to invest in our business, which will help drive further organic growth and margin expansion in the future. I want to take a moment to thank all of our teammates, as these results would not be possible without all of their hard efforts. I'm now on slide five. The first quarter was an interesting one as we entered it with a lot of optimism about what the new administration might do to further improve the economy.
As the quarter continued, some of this optimism has slowed and now companies are more cautious or skeptical about what shape some of the programs, including tax reform, infrastructure projects, and ACA reform will take and when they might actually take effect, if at all. With that said, we did see the economy continue to expand across most communities in the past quarter. There are a number of geographies that are doing well, as evidenced by construction starts, while communities that are tied to oil and gas have leveled out. As we mentioned before, increases in exposure units are the primary driver of growth in our customer base. Similar to previous quarters, the amount of capital and appetite to deploy this capital has not slowed. All risk bearers are looking for creative ways to retain their renewals.
Over the past few years, we've generally been experiencing consecutive decreases in premium rates across most lines. We would say that in the first quarter, coastal property rates are not down as much as they were last year. The rates were decreasing between 5%-25%, but slowed in the first quarter of this year and are decreasing between 2%-10%. We've also talked about in previous quarters about rate increases for commercial auto, which is being driven primarily by frequency of claims and distracted drivers. Well, that trend continued in the first quarter with rates generally flat to +5% with most accounts closer to +5%. In all other lines of coverage, rates are generally flat to -5% with the exception, as I mentioned earlier, of commercial auto and coastal property.
One of the bigger topics during the quarter was what the impact would be if there was any reform to the Affordable Care Act. This was an addition to the continual topic of cost containment for healthcare plans. With the material increases to premium rates for most state exchanges or decreases in the number of providers or both, we did see customers continue to manage plan design. Creativity around plan options is at the forefront. We continue to believe that this uncertainty and need for creativity is a positive for Brown & Brown, as it positions us well as a trusted advisor to bring alternative options to customers that best address the needs of their company and their employee base. I'm going to switch gears now and talk about the performance of our four divisions. Excuse me.
From a retail perspective, we had a really nice quarter and grew 4% organically as compared to 70 basis points for the first quarter of last year. We realized continued improvement in our momentum that we created in 2016. We did have about 100 basis points of benefit this quarter from timing related items. Underlying our organic growth was closer to 3%, which we view as a really good improvement. The performance of the first quarter was driven by, one, solid new business, two, higher retention, as we had fewer insureds that were acquired as we did in the first quarter of last year. We are seeing increased exposure units, as I referred to earlier, and in some cases, flattening of premium rate decreases. We realized solid improvement across almost all lines of business with our employee benefits and large account businesses performing the best this quarter.
Last quarter, we talked about the approval by the Florida Office of Insurance Regulation to increase workers' compensation rates by 14.5%, effective December 1st of 2016 for all new policies and upon renewal for all existing policies. The rate increases are taking effect for some customers, but we also have customers trying to manage their payrolls in order to best manage the cost increases. We believe that if the rate increases remain in effect, the impact on our entire retail division will not be material, as the annualized benefit would only be in the range of $1.5 million to $2 million in Florida, and you combine that with a number of other states that have decreased their workers' compensation rates for 2017. We do not expect any material benefit or detriment to retail in 2017. Shannon, I was going to ask, I hear a clicking in the background.
I don't know if there's something on your end. I just wanted to bring that to your attention. Since we know everyone's going to ask us, we wanted to share with you how our new five for five incentive program is working. As a reminder, this program will pay a producer an incremental 5% if a book of business grows organically 5% for the full year in 2017. The initial reaction from our producers has been really good, and they're all very focused on retaining business and bringing in new accounts. It's still very early in the year to determine how the program will ultimately drive performance. We do believe that a small portion of our increased performance for the quarter was driven by the new program. The performance of our national programs division was right in line with our expectations for the first quarter.
We anticipated that the carrier changes for a couple of our programs will impact our revenue retention during the transition period. As we mentioned previously, this is common during carrier changes. Once the new carrier is in place, the revenue will stabilize, and we'll have the opportunity to grow. We highlighted last quarter that these changes will result in a decrease of revenues for national programs in 2017 of approximately $5 million-$7 million for the full year versus 2016. During the quarter, we felt the year-on-year impact of premium rate decreases on our coastal property programs. The decline from the carrier changes and the coastal property programs offset the solid performance from a number of our other programs. During the quarter, our lender placed program, our commercial and residential DIC programs, and our flood program did well, just to name a few.
Our wholesale business had a really good quarter, growing 7.4%. This is a great performance. During the quarter, we realized growth across almost all lines of coverage and most businesses. Our binding authority business and our personal lines businesses performed really well again this quarter, and our brokerage businesses improved nicely as we wrote more new business and rate decreases were less than in the prior year. The services division experienced good organic growth for the quarter at 4.9%. This was driven primarily by claim activity related to the spring storms in Texas, and also to our Social Security advocacy business, performed well during the quarter. In summary, we are very pleased with the performance of our four divisions for the first quarter of 2017. Now let me turn it over to Andy, who will discuss our financial performance in more detail.
All right, great. Thanks, Powell. Good morning, everyone. I am over on slide number six. This shows our GAAP reported results for the quarter. In the first quarter, we delivered total revenue growth of 9.6% and organic growth of 3.5%. Our income before income taxes grew by 8.2%, and our diluted earnings per share increased by 11.4% to $0.49 versus $0.44 in the first quarter of last year. Our weighted average number of shares increased by 1.5%, mainly due to shares issued as part of our long-term equity plan and our employee stock purchase program. Our goal each year is to minimize the impact of these share programs via periodic stock repurchases throughout the year. Lastly, our dividends increased just over 10% for the quarter.
Due to the impact of the legal settlement we received, we are going to spend most of our time discussing our financial performance on an adjusted basis. On slide number seven, this presents our adjusted numbers after removing the impact of the cash proceeds and the associated legal costs related to the legal settlement, the change in the acquisition earn-out liabilities, and the new ASU related to the accounting for stock-based compensation. During the quarter, we received $20 million and incurred about $1.2 million of legal costs for a net benefit of $18.8 million related to the aforementioned legal settlement. Excluding these items, our revenues increased by 4.9%, our income before income taxes decreased by 5.5%, and our EBITDAC declined by 3.6%, with net income declining 3.3%.
In a few slides, we are going to talk through the primary drivers of the changes in our margins, which are primarily one time in nature or were recorded last year. Moving over to slide number eight, we are going to go through the key components of our revenue performance for the quarter. Starting with total revenues, our other income increased by $18.9 million, driven by the legal settlement we mentioned previously. Our contingent commissions and GSCs are down about $1.4 million as compared to the first quarter of the prior year. This is really driven primarily by increased loss ratios from some carriers, and we had a couple of carriers change from guaranteed supplemental commission plans to contingent commission plans within our retail division. Our core commissions and fees increased by 6.2% year-over-year.
Isolating the net impact of our M&A activity, our organic revenue growth was 3.5% for the quarter. We want to caution everyone not to assume that our future quarters this year will be at the same level, as we have the year-over-year impact of storm claim revenues we recognized in the second half of 2016, and we have the carrier changes within national programs. Both of these are going to put downward pressure on our top line year-over-year. Due to all the moving parts in the first quarter, we thought it'd be helpful to include a walk of our EBITDAC margins from last year to this year, and we're on slide number nine now. We do not anticipate providing this level of detail in future quarters unless it's beneficial to the understanding of our numbers.
On an as reported basis, our margins increased by 10 basis points, but as you'll see, there are a number of components. The largest impact was from the net legal settlement that improved margins by 270 basis points. We had the premium tax refunds and SIP credits we recorded in the first quarter of last year that each contributed 70 basis points of margin. We had a $2 million gain on the sale of a book of business in 2016 that increased the prior year margins by 50 basis points. We view these first four items as one-time in nature, or they only impacted the prior year. For the quarter, the impact of our investment technology was about 40 basis points. As it relates to the investment in technology, the programs are progressing along as we'd expected.
Next is the impact from the new Five for Five incentive plan within retail. As Powell mentioned, this program is still in the early days, but it's performing financially how we thought it would based upon the results in the first quarter. As a reminder, we anticipate this program will impact our margins for 2017 and 2018, and then we'll recover the decline in margins in 2019. Within other, is the net effect of the lower contingents and guaranteed supplemental commissions and the impact of leveraging our revenues. We want to continue to reiterate that we believe our business can operate at 33%-35% EBITDAC margins, but we might be outside of this range at certain times based upon investments in our business or our top line growth. We're going to move over to slide number 10.
We'll take a look at the performance of each of our divisions a little more closely. We're going to start with retail. For the first quarter, our retail division delivered 4% organic revenue growth, which was driven by improved performance across all lines of business. We had a lower reduction in lost business as we had fewer customers that were acquired through M&A. Also, we had about 100 basis points of benefit from the timing of revenues. The timing came from transactions that were not recognized in the fourth quarter of last year or some incentives that were realized in the first quarter of this year. Our income before income taxes was down $1.6 million due to higher acquisition earn-out adjustments of $4.8 million year-over-year, partially offset by lower intercompany interest charges and a gain of $2 million on a sale of book of business last year.
Retail's year-over-year reported EBITDAC margin decreased by 60 basis points, primarily due to the lower contingent and GSC commissions, the gain on the sale of the book of business, and to a lesser extent, the expense associated with the five for five incentive program. We're going to move over to slide 11. Our national programs division delivered revenues consistent with the prior year, which is in line with our expectations for the reasons that Powell mentioned earlier. As a reminder, we expect there to be downward pressure in the second half of this year on organic revenue growth as we had storm claim revenues in the second half of 2016, and we had the carrier changes we mentioned earlier.
For the quarter, income before income taxes as a percentage of revenue decreased from 13.6% to 12.4%, due primarily to our flood insurance program receiving one-time premium tax refunds of approximately $3 million during the first quarter of 2016. This was partially offset by lower intercompany interest expenses charges. Our EBITDAC margin decreased by 400 basis points due to the aforementioned one-time premium tax refunds and the loss of revenue associated with the programs that are changing carriers and the decline in our coastal property programs. On to slide 12. This is the wholesale division. For the quarter, the division delivered total revenue growth of 22.1%, driven by acquisitions and organic revenue growth of 7.4%. Income before income taxes decreased by 380 basis points to 23.5%.
This was driven by the impact of lower margins associated with certain acquisitions, our business mix, which is really the result of higher transaction volumes at lower premium prices, and the increase in intercompany interest expense. Our EBITDAC margins are 31.3% for the quarter versus 33.3% in the prior year. This decline was driven by the same factors we just mentioned, but excludes the impact of intercompany interest charges. Over to slide 13, our services division had another good quarter and delivered total revenue growth of 7.4% and organic growth of 4.9%. For the quarter, our EBITDAC margin increased by 60 basis points, primarily due to higher claim volumes, managing our cost, and the acquisition of a higher margin business in the first quarter of 2016. The incremental increase in income before income taxes as a percentage of revenue was driven by lower intercompany interest expense.
A few additional comments for the quarter. During the first quarter, we adopted ASU 2016-09, which relates to the accounting for stock-based compensation awards. This ASU requires that upon vesting of stock-based compensation, any tax implications be treated as a discrete credit to income tax expense in the quarter of vesting. The prior treatment required that the tax implication be treated as a reduction in additional paid-in capital. During the first quarter, we recognized about $3 million of tax credit, which decreased our effective tax rate to just below 37%, versus about 39.5% in the prior year. Based on our vesting schedules, the majority of the tax benefits will be in the first quarter of each year. We continue to estimate that our full year effective tax rate will be in the range of 39%-39.3%.
Regarding technology, we want to note that the incremental margin impact will be in the range of 40 to 50 basis points as compared to 2016. We expect the cost within the retail segment to continue to increase as the year progresses. With that, let me turn it back over to Powell for closing comments.
Thank you, Andy. Great report. As we move into Q2, we watch the potential for ACA reform and tax reform with great interest, as I know you do. Rates overall are flat to down slightly. One quarter does not make a trend. Cat property rates saw declines of 10% or less. A word of caution, there are lots of large property schedules that renew in Q2, so we'll see how rates hold or decrease in Q2. The M&A environment continues to be very competitive. We continue to search for firms that fit culturally and make sense financially. In the current environment, we've seen a number of deals that do not make sense to us financially. In closing, we enter Q2 with cautious optimism about what the year might look like.
We have lots of great activity going on throughout our company and are making progress on many of our initiatives to drive the business forward. With that, let me turn it back over to Shannon for the Q&A session.
Thank you. Ladies and gentlemen, if you'd like to ask a question, please do so by pressing the star key, followed by the digit one on your touch tone telephone. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, that's star one for questions. Our first question will come from Elyse Greenspan of Wells Fargo.
Hi. Good morning. First off, I was hoping to just tie together some comments you guys made. Powell, you mentioned cautious and optimistic, I guess, commentary about the economy, then you guys did point to the improvement in retail. Backing out the one-timers, you sat at around 3%. How do you envision the back three quarters of 2017 on— I know Q1 2016 was the easiest comp for that business last year. How do you envision the growth trajectory given the economy that we're sitting in today, kind of the organic, should it pick up from the 3% in the remaining three quarters of the year? How do you kind of see that playing out?
Okay, Elyse, I appreciate the question, and as you know, we don't give organic growth guidance. We're going to say that it's somewhere between 0 and mid-single digits. Having said that, we watch the economy as closely as you and everybody else does. As I said, one quarter doesn't make a trend.
Okay. In terms of the margins for the quarter, if you back out the one-timers from last year in the tech spend and the retail program, the margins were about flat on an overall basis. How do you envision margins playing out through the remaining three quarters? I know there is some headwind given the lack of flood business in the back half of the year, how do you envision the margin trajectory, I guess, ex the tech and the retail costs for the balance of the year?
Elyse, if I could clarify, you're talking at the total company level, correct?
Yes.
Yeah. What we'd say on those is we would expect that the tech and the five for five program would continue to put some pressure on margins in the back end of the year. Also just a reminder, we did have some of the tax premium refund in the second quarter of last year. That will also put some pressure on those. With the carrier changes in national programs, again, that will put some pressure on the margin back end of the year.
Okay, on the tech side, you mentioned 40 to 50 basis points. It had been 35 to 40, so are you increasing, I guess, the spend that you're expecting for 2017 from your comments today?
Yeah, a little bit on there, Elyse. I think it's just as we get better visibility to the programs, and as they gain momentum, we're able to kind of tighten up our range a little bit. Not any major movements, but that's kind of the ballpark we see right now.
Okay, you didn't say, I'm assuming you guys didn't repurchase any stock in the quarter. You do have some cash from the legal settlement, and given, I guess, where you see acquisitions prices today, has anything changed on your view in terms of capital management and allocation in terms of share repurchase?
Nothing's changed, Elyse. We continue to evaluate it, and we talk to our board about it when we're together, but there's no change in the way we look at capital allocation.
Okay, thank you very much.
Thank you.
As a reminder, that is star one if you'd like to ask a question. Our next question will come from Kai Pan of Morgan Stanley.
Thank you, and good morning.
Good morning.
Just follow up on the five for five program, and it looks like you pay close to $2 million of additional compensation accrual for the quarter, which kind of imply 5% additional, like $35 million of commissions. I just want to make sure my math is right and how do you accrue for this incentive program?
Yeah, let me see if I can clarify a little bit on it, Kai. The way the program works is that anybody that is able to grow the book over 5% for the full year 2017, would get that. As we mentioned when we rolled this plan out at the beginning of the year, and we talked about on the year-end call, is there's going to be some of our producers that are already over 5%. It's not that you've got your full year, because I think what you're trying to do is presume that if you take your 2%, kind of divide it all the way out, you got an incremental 35, but it wouldn't actually work that way.
Okay. Will that be accrued throughout the year? Every quarter you will have additional accrual depending on the performance?
Yes, depending upon performance. Correct. Yep.
Okay. Then on the margin side, is that the 40 basis point from tech and the 40 basis point from the incentive program, assuming it will continue, would that be sort of like the basically run rate basis?
Well, on tech, we said it was going to be 40 to 50 basis points, we can't say yet on the five for five accrual because we have to watch it every quarter.
If we can, let's clarify on the technology spend. It can be up and down during the year. Let us explain what we mean by that, because we started into the programs during last year and the spend started picking up in the back end of the year, we're going to have, at times, a higher impact in the first half of this year. As we start to lap the expenses, the impact will be less. You probably don't want to take it into a straight line across the board. You would probably expect that the second quarter would be a little bit higher.
Okay. That's great. Lastly, on your cash balance, now reached close to $550 million, the highest probably in your company history. Just wonder how much cash you need to keep on the balance sheet to run your day-to-day operations, and what's the level of the excess capital or cash you would keep on balance sheet for extended period of time, and how do you plan to deploy it?
Yeah. Kai, we haven't disclosed what we think the required working capital is in the company. We've got a sufficient amount of cash as well as access to whatever capital that we need.
I'd like to address the second point, which I think is the most important. Kai, I believe that I said this last time, but if I didn't, I'll clarify it for everybody. We have been very clear that we are deploying our capital in three ways, one, through hiring new teammates and growing our business organically. Two, by acquisitions, and three, to return it to shareholders through either dividends or share repurchases or some combination thereof. We're going to pay out about $70 million in dividends this year to our shareholders.
Having said that, I have been asked that what happens if, in fact, acquisitions were very expensive going forward for a protracted period of time, and if we evaluated our stock price and we thought the stock price was fully valued at the time. The answer to the question is that we're going to stockpile cash on our balance sheet. If anybody wants to criticize somebody at Brown & Brown, you can criticize me. We do not have a hole burning in our pocket, and I know you know that. We look very closely at our acquisitions and how we deploy that capital, and will continue to do so.
It's interesting because, as I alluded to in my prepared remarks, some of the acquisitions that we see out there, we know that the numbers don't make sense, but we're a forever company, and those companies are going to be flipped in three to five to seven years. They don't build cultures in that period of time. We've only been doing this for 77 years, and we think we really have a strong culture, and we'll continue to maintain that. I anticipate that we will have opportunities to deploy our capital fine over the intermediate to longer term, but it's very possible we could continue to stockpile cash on the balance sheet. As you know, last year, I believe that we added $72 million to the cash on hand year-over-year. The prior year, we paid out about all of the cash that we earned.
That's it.
Okay. That's very clear. Thank you so much.
Thank you.
Thank you.
Our next question will come from Mark Hughes of SunTrust.
Yeah, thank you. Good morning. The Social Security advocacy business, you've had good success there. Any color you can provide on whether that's new clients, more claims coming from existing clients, or you're just having more success getting those benefits for your clients?
Well, remember, there's two clarifications. We work on behalf of insurance company partners to get these settled, sometimes. I shouldn't say sometimes. It is very highly dependent on the way those claims are processed with the Federal Government. When I say that, Mark, sometimes things seem to be going in a good pace and a flow, and we get a lot processed. Then there are some times, i.e., when there's a question about funding for the Federal Government, when things slow down, and we've talked about that in the past. I would basically say that we continue to enjoy and work really hard on behalf, working for our carrier partners in this regard. I think that success breeds success. When you do a good job, then you have the opportunity to earn more business from those partners.
There's not one thing that's just sticking out that's saying this is happening, which is dramatically changing our results there.
Right. At least from your perspective, the process is working smoothly, you might say, in Washington on this topic.
Well, I don't know if I'd say that. I think that you might have been a little bit overly zealous in your response there. I would say that today, things are still being processed, and if you could give us more clarity on what's happening in Washington, we would all like to know. I am cautious about saying something that broadly.
Right. Andy, you've talked about you've got some tough comps on the storm claim business. Is there kind of an elevated revenue or revenue number above trend that you have in mind when you think about the potential pressure in the second half?
Yeah, Mark, we had called out, we said we had about $9 million of incremental storm claim revenue last year over 2015, which almost all primarily fell in the second half of the year. During our calls last year, we had called out about $4 million in the third quarter and about $3 million in the fourth quarter. There's a little bit kind of first and second quarter, the big chunks are back end of the year.
Thank you very much.
You got it. Thank you.
Thanks, Mark.
Our next question will come from Joshua Shanker of Deutsche Bank.
Yeah, thank you very much.
Good morning.
You guys reiterated that 33%-35% EBITDA margin is your expected normal, and obviously, you're below that right now. When you're talking about the wholesale business, you had big growth, but huge decline in operating leverage due to a change in business. Isn't a change in business mix kind of a permanent sort of thing that permanently affects the long-term margins of the business? How do we get back to 33%-35%?
Okay. Well, let me talk broadly about the business, and then I'll talk specifics in terms of divisions. Number one, obviously, as you know, that we had a decrease in profit sharing for the quarter. That in and of itself has a significant impact, number one. Number two, specifically in the wholesale segment. The wholesale segment of our business, we did an acquisition last year that has lower than historic margins, which we have to move up over time, which we are doing. We also seem to have more flow of activity, but the compression in rates is making that more costly to service. That's probably the way to say it. Our profit-sharing overall has been down in wholesale to the prior year.
If you look inside of programs, we've articulated that we have several programs that are actually changing carriers, which is going to have a revenue impact of, we've stated, $5 million-$7 million. We also have said that in our coastal property programs, rates have been going down and continuing to go down, that has compressed our margins in those particular programs as well. In retail, as we said, we had a very good quarter, but we continue to invest in the business, i.e., hiring people. We had a good quarter also in services. When you put all that together, I would say that's the clearest I think we can make it, in terms of the pressure points on the business, kind of across the way. Andy, you got anything else to add on that?
Yeah, Josh, when we give the ranges, we're not saying that we're going to be there in 2017. That's kind of what we call our, what should be the interim range, and we can be above. Just as we've talked about our organic, we should be in the low to mid-single digits in kind of a normal, stable economy. Well, that's different things going on with rates, et cetera. That's where we do believe that we can operate the business. We have been able to do that over the last 10 and 20 years as we've grown the business substantially. It might be outside of that every now and then, but we think we've got the right operating framework.
Should we be there in 2019?
There's too much speculation. We don't know what the economy's going to be doing, what rates are going to be doing, or any of that. What we're trying to do is we're trying to grow the business organically and add with good acquisitions where we can find them and obviously grow the profit-sharing. The profit-sharing's been under a pressure because of losses and rate increases.
That makes sense. One other question about the five for five. In your experience, is there any difference in the stickiness of business acquired via standard procedure versus acquired during an incentive plan?
Not that we're aware of.
Okay. Thank you very much. Good luck.
Thank you, Josh.
As a final reminder, dial star one if you'd like to ask a question or if you do have a follow-up question. Our next question will come from Adam Klauber of William Blair.
Good morning. Thanks. Wholesale business was very strong. I guess, what was the level of submissions, and do you think you're taking market share in that business?
Well, I'm not trying to be funny, Adam, but we had a lot of submissions.
Yeah.
I'm not going to say that I think the important thing that you know is, one, we have a lot of activity in wholesale. As Anthony Strianese says, you got to flip a lot of hamburgers, particularly in binding authority and personal lines. Number one. Number two, we referenced that the CAT property, the large transactional wholesale rates were not down as much as we anticipated. I also caution you to say that one quarter doesn't make a trend. We were very pleased with the performance in Q1 of wholesale, and I would say that I'm only speaking on behalf of myself, but I was pleasantly surprised because I anticipated further rate pressure in CAT property.
Okay. That's helpful. As far as Wright, is that business expanding? I know it's growing, but are you expanding the distribution, or are you just able to grow that business?
Well, I think that it's a combination of both. Remember, we're servicing retail agents across the country, so we can service existing agents, and we can work with new agents or writing new policies on behalf of existing or new agents. We think that there are growth opportunities in a bunch of different ways there, and we're very pleased with how Wright Flood is doing.
Okay. On the benefit, I know you don't break that out or give exact, has that grown in the range of the overall retail, better or worse, or just some idea how that business has grown? Some ballpark idea would be helpful.
It's growing nicely. I don't mean to be flippant, we don't give the exact number, but I'm very pleased with where we are for employee benefits.
Yeah. That's just ballpark that's helpful. Okay. Thank you very much.
Thank you.
It does appear we have no further questions at this time.
Okay, well, thank you all very much, and have a wonderful day. We look forward to talking to you at the end of Q2.
Thank you.
That does conclude-
Bye-bye
today's teleconference. Thank you all for your participation