Goosehead Insurance, Inc. (GSHD), Mid/Small Cap AI Study of the Week

Goosehead Insurance, Inc. (GSHD), Mid/Small Cap AI Study of the Week

July 11, 2024

Weekly AI Study from the S&P 400 or S&P 600

Company Overview

Goosehead Insurance, Inc. (GSHD) is an independent insurance agency experiencing rapid growth in the U.S., driven by a unique business model and innovative technology platform. The company partners with over 150 carriers to offer a wide range of insurance products, supported by knowledgeable sales and service agents and proprietary technology, resulting in an impressive 86% client retention rate. Their Digital Agent platform enhances the customer journey by providing specific home and auto insurance quotes and enabling quick policy binding. This platform also improves agent productivity and retention by handling policy fulfillment and servicing, adding significant value to carriers through simplified, profitable distribution. As a result, total written premiums increased by 34% to $3.0 billion in 2023.

Goosehead's growth strategy includes recruiting talented agents, enhancing productivity through proprietary technology, and maintaining strong retention rates at their service centers. The company's business model allows both corporate and franchise agents to focus on new client acquisition and issuing new policies, leading to rapid growth in New Business and Renewal Revenues. They utilize a proprietary marketing strategy to establish referral relationships without compensating for leads, relying instead on excellent service to generate repeat business. The company's corporate and franchise sales agents exhibit productivity significantly surpassing industry standards due to focused training and the elimination of ongoing service burdens. Goosehead generates revenue through New Business Commissions, Agency Fees, Renewal Commissions, and Renewal Royalty Fees, with franchise sales premiums growing by 37% in 2023. Despite a decrease in the total number of franchises in 2023, Goosehead continues to leverage technology and focuses on quality services to compete in the highly competitive insurance brokerage market. Key growth strategies include expanding recruitment efforts, particularly on college campuses, and utilizing targeted internet campaigns, positioning Goosehead for continued success in a fluctuating insurance market.

By the Numbers

Annual 10-K Report Summary for Fiscal Year 2023:

  • Total revenue (Annual 2023): $261.3 million, up 25% from $209.4 million in 2022.
  • Total Written Premiums (Annual 2023): $3.0 billion, up 34%.