SOURCE: Brown & Brown, Inc.

April 21, 2008 17:18 ET

Brown & Brown, Inc. Announces a 3.2% Increase in Commissions and Fees Revenues

DAYTONA BEACH, FL and TAMPA, FL--(Marketwire - April 21, 2008) - Brown & Brown, Inc. (NYSE: BRO) today announced its net income and net income per share for the first quarter of 2008. Additionally, it announced that its commissions and fees revenues for the first quarter of 2008 increased 3.2% over the first quarter of 2007.

Net income for the first quarter of 2008 was $51,760,000 or $0.37 per share, compared with $59,727,000 or $0.42 per share for the same quarter of 2007. Excluding the non-recurring gain of $8,840,000 on the sale of Rock-Tenn shares in the first quarter of 2007, net income for the first quarter of 2007 was $54,343,000 or $0.38 per share.

Total revenues for the quarter ended March 31, 2008 were $256,715,000, compared with $258,513,000 recorded in the corresponding quarter of 2007. Excluding the $8,840,000 non-recurring gain on the sale of stock of Rock-Tenn Company in the first quarter of 2007, total revenues for the quarter ended March 31, 2008 increased 2.8% over the adjusted total revenues in the corresponding quarter of 2007, which equaled $249,673,000.

J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "Our results are not surprising given the continuation of the most difficult insurance market environment in recent memory. We have great faith in the ability of our leaders at each of our decentralized office locations to continue to drive the sales and operating margins in the most effective manner given their local market environments. This leadership depth is critical to our ability to continue industry-leading results even in the face of continued difficult market conditions."

Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "For the first quarter and April to date, we have announced the completion of 13 acquisitions with annualized revenue of $43.8 million. We believe this select group of agencies is the best in class and we are proud to have them join the team. The continued soft market is a catalyst for change and has stimulated an abundance of M & A opportunities. Our operating model and available liquidity combine to make us an attractive option for like-minded sellers."

Brown & Brown, Inc. and its subsidiaries offer a broad range of insurance and reinsurance products and services, as well as risk management, third party administration, managed health care, and Medicare set-aside services and programs. Providing service to business, public entity, quasi-public entity, individual, trade and professional association clients nationwide, the Company is ranked by Business Insurance magazine as the United States' sixth largest independent insurance intermediary. The Company's Web address is www.bbinsurance.com.

This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to future financial results and to identifying and consummating attractive acquisition opportunities. These statements are not historical facts, but instead represent only the Company's current belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the Company's actual results, financial condition and achievements may differ, possibly materially, from the anticipated results, financial condition and achievements contemplated by these forward-looking statements. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results and condition, as well as its other achievements, are contained in the Company's filings with the Securities and Exchange Commission. Some factors include: general economic conditions around the country; downward commercial property and casualty premium pressures; the effects of recent legislative and regulatory changes in Florida pertaining to the insurance industry, including those relating to coastal property coverages; the competitive environment; the integration of the Company's operations with those of businesses or assets the Company has acquired or may acquire in the future and the failure to realize the expected benefits of such integration; the potential occurrence of a disaster that affects certain areas of the States of California, Florida, Georgia, Michigan, New Jersey, New York, Pennsylvania, Texas and/or Washington, where significant portions of the Company's business are concentrated; and the cost and impact on the Company of previously disclosed regulatory inquiries regarding industry and Company practices with respect to compensation received from insurance carriers. All forward-looking statements made herein are made only as of the date of this release, and the Company does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which the Company hereafter becomes aware.

                          Brown & Brown, Inc.
                    CONSOLIDATED STATEMENTS OF INCOME
           For the Three Months Ended March 31, 2008 and 2007
                   (in thousands, except per share data)
                               (unaudited)

                                                          2008      2007
                                                        --------- ---------
REVENUES
Commissions and fees                                    $ 253,528 $ 245,559
Investment income                                           1,999    11,579
Other income, net                                           1,188     1,375
                                                        --------- ---------
   Total revenues                                         256,715   258,513
                                                        --------- ---------

EXPENSES
Employee compensation and benefits                        121,187   110,810
Non-cash stock-based compensation                           1,944     1,502
Other operating expenses                                   31,204    31,923
Amortization                                               11,116     9,502
Depreciation                                                3,246     3,040
Interest                                                    3,434     3,634
                                                        --------- ---------
   Total expenses                                         172,131   160,411
                                                        --------- ---------

Income before income taxes                                 84,584    98,102

Income taxes                                               32,824    38,375
                                                        --------- ---------

Net income                                              $  51,760 $  59,727
                                                        ========= =========

Net income per share:
   Basic                                                $    0.37 $    0.43
                                                        ========= =========
   Diluted                                              $    0.37 $    0.42
                                                        ========= =========

Weighted average number of shares outstanding:
   Basic                                                  140,704   140,221
                                                        ========= =========
   Diluted                                                141,327   141,194
                                                        ========= =========

Dividends declared per share                            $    0.07 $    0.06
                                                        ========= =========




                            Brown & Brown, Inc.
                         INTERNAL GROWTH SCHEDULE
                        Core Commissions and Fees(1)
                       Three Months Ended March 31, 2008
                               (in thousands)
                                 (unaudited)



                                         Total     Less  Internal  Internal
           Quarter   Quarter    Total     Net    Acquisi-   Net      Net
            Ended     Ended      Net     Growth    tion    Growth   Growth
           3/31/08   3/31/07    Change     %     Revenues    $        %
           --------- --------- --------  -----   -------- --------  -----

Florida
 Retail    $  41,635 $  43,891 $ (2,256)  (5.1)% $    921 $ (3,177)  (7.2)%
National
 Retail       70,685    51,701   18,984   36.7 %   19,842     (858)  (1.7)%
Western
 Retail       21,704    22,426     (722)  (3.2)%      262     (984)  (4.4)%
           --------- --------- --------          -------- --------
  Total
   Retail    134,024   118,018   16,006   13.6 %   21,025   (5,019)  (4.3)%
           --------- --------- --------          -------- --------

Wholesale
 Brokerage    37,039    37,267     (228)  (0.6)%    4,979   (5,207) (14.0)%

Professional
 Programs     10,385    10,438      (53)  (0.5)%        -      (53)  (0.5)%
Special
 Programs     27,800    24,484    3,316   13.5 %      131    3,185   13.0 %
           --------- --------- --------          -------- --------
Total
 National
 Programs     38,185    34,922    3,263    9.3 %      131    3,132    9.0 %
           --------- --------- --------          -------- --------

Services       7,933     8,954   (1,021) (11.4)%        -   (1,021) (11.4)%
           --------- --------- --------          -------- --------

Total Core
 Commissions
 and Fees
 (1)       $ 217,181 $ 199,161 $ 18,020    9.0 % $ 26,135 $ (8,115)  (4.1)%
           ========= ========= ========          ======== ========




                   Reconciliation of Internal Growth Schedule
                           to Total Commissions and Fees
               Included in the Consolidated Statements of Income
               for the Three Months Ended March 31, 2008 and 2007
                                 (in thousands)
                                   (unaudited)


                                                         Quarter   Quarter
                                                          Ended     Ended
                                                         3/31/08   3/31/07
                                                        --------- ---------
 Total core commissions and fees(1)                     $ 217,181 $ 199,161
 Contingent commissions                                    36,347    44,057
 Divested business                                              -     2,341
                                                        --------- ---------

 Total commission & fees                                $ 253,528 $ 245,559
                                                        ========= =========


(1)   Total core commissions and fees are our total commissions and fees
      less (i) profit-sharing contingent commissions (revenue derived from
      special revenue-sharing commissions from insurance companies based
      upon the volume and the growth and/or profitability of the business
      placed with such companies during the prior year), and (ii) divested
      business (commissions and fees generated from offices, books of
      business or niches sold by the Company or terminated).




                          Brown & Brown, Inc.
                     CONSOLIDATED BALANCE SHEETS
                (in thousands, except per share data)
                              (unaudited)


                                                    March 31,  December 31,
                                                      2008         2007
                                                    ----------- -----------
ASSETS
Current assets:
  Cash and cash equivalents                         $    16,990 $    38,234
  Restricted cash and investments                       239,350     254,404
  Short-term investments                                  4,673       2,892
  Premiums, commissions and fees receivable             231,471     240,680
  Deferred income taxes                                       -      17,208
  Other current assets                                   55,022      33,964
                                                    ----------- -----------
    Total current assets                                547,506     587,382

Fixed assets, net                                        62,199      62,327
Goodwill                                                896,544     846,433
Amortizable intangible assets, net                      459,098     443,224
Other assets                                             20,802      21,293
                                                    ----------- -----------
    Total assets                                    $ 1,986,149 $ 1,960,659
                                                    =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Premiums payable to insurance companies           $   376,829 $   394,034
  Premium deposits and credits due customers             35,956      41,211
  Accounts payable                                       35,665      18,760
  Accrued expenses                                       52,472      90,599
  Current portion of long-term debt                       7,421      11,519
                                                    ----------- -----------
    Total current liabilities                           508,343     556,123

Long-term debt                                          252,627     227,707

Deferred income taxes, net                               69,048      65,736

Other liabilities                                        14,300      13,635

Shareholders' equity:
  Common stock, par value $0.10 per share;
   authorized 280,000 shares;  issued and
   outstanding 140,724 at 2008 and 140,673 at 2007       14,072      14,067
  Additional paid-in capital                            234,342     231,888
  Retained earnings                                     893,403     851,490
  Accumulated other comprehensive income                     14          13
                                                    ----------- -----------

    Total shareholders' equity                        1,141,831   1,097,458
                                                    ----------- -----------

    Total liabilities and shareholders' equity      $ 1,986,149 $ 1,960,659
                                                    =========== ===========

Contact Information

  • Contact:
    Cory T. Walker
    Chief Financial Officer
    (386) 239-7250