SOURCE: Brown & Brown, Inc.

Brown & Brown, Inc.

February 16, 2009 16:36 ET

Brown & Brown, Inc. Announces a 7.8 Percent Increase in Commissions and Fees Revenues

DAYTONA BEACH, FL and TAMPA, FL--(Marketwire - February 16, 2009) - Brown & Brown, Inc. (NYSE: BRO) today announced its net income and net income per share for the fourth quarter of 2008.  Additionally, it announced that its total commissions and fees revenues for the fourth quarter of 2008 increased 7.8% over the fourth quarter of 2007.

Net income for the fourth quarter of 2008 was $33,373,000, or $0.24 per share, compared with $33,004,000, or $0.23 per share for the same quarter of 2007, an increase of 4.3% in net income per share.  Total revenues for the fourth quarter ended December 31, 2008 were $232,090,000, compared with the 2007 fourth-quarter revenues of $217,226,000.

Total revenues for the year ended December 31, 2008 were $977,554,000, compared with the total revenues for the year ended December 31, 2007 of $959,667,000.  Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in 2007, total revenues in 2008 increased 3.9% over the adjusted total revenues in 2007 of $941,003,000.  Net income for the year ended December 31, 2008 was $166,124,000, or $1.17 per share, compared with $190,959,000, or $1.35 per share for 2007. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in 2007, the adjusted net income for 2007 was $179,291,000 compared to net income in 2008 of $166,124,000.

J. Hyatt Brown, Chairman and Chief Executive Officer, noted, “We continue to traverse rough seas and deliver industry-leading margins, in addition to tolerable (at this time) top-line growth.  As we cross the current economic valley, we have increased our budget to bring in new quality people in order to continue our relentless pursuit of top-line and bottom-line growth.”

Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, “In the fourth quarter of 2008 we acquired 15 agencies, representing $24.1 million in estimated annualized revenues.  For the 2008 calendar year, we acquired 45 agencies with estimated annualized revenues of $115.4 million -- our best year ever in terms of number of transactions.   Looking into 2009, the acquisition landscape appears to be robust.  In this period of economic stress, it is very important to be selective about your acquisition partners in order to ensure the sustainability of an acquisition’s revenues and earnings.”

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’ seventh 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 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, 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
(in thousands, except per share data)
(unaudited)
    For the
Three Months
Ended
December 31
  For the
Twelve Months
Ended
December 31
    2008   2007   2008   2007
REVENUES                
Commissions and fees 229,854  213,194  965,983  914,650 
Investment income   943    2,639    6,079    30,494 
Other income, net   1,293    1,393    5,492    14,523 
  Total revenues   232,090    217,226    977,554    959,667 
                 
EXPENSES                
Employee compensation and benefits   121,910    110,164    485,783    444,101 
Non-cash stock-based compensation   1,751    1,340    7,314    5,667 
Other operating expenses   35,359    34,962    137,352    131,371 
Amortization   11,842    10,638    46,631    40,436 
Depreciation   3,357    3,271    13,286    12,763 
Interest   3,645    3,357    14,690    13,802 
  Total expenses   177,864    163,732    705,056    648,140 
                 
Income before income taxes   54,226    53,494    272,498    311,527 
                 
Income taxes   20,853    20,490    106,374    120,568 
                 
Net income 33,373  33,004  166,124  190,959 
                 
Net income per share:                
  Basic 0.24  0.23  1.18  1.36 
  Diluted 0.24  0.23  1.17  1.35 
                 
Weighted average number of shares outstanding:                
  Basic   141,463    140,701    140,992    140,476 
  Diluted   141,939    141,355    141,558    141,257 
                 
Dividends declared per share 0.075  0.07  0.285  0.25 



Brown & Brown, Inc.  
INTERNAL GROWTH SCHEDULE  
Core Commissions and Fees (1)  
Three Months Ended December 31, 2008  
(in thousands)  
(unaudited)  
    Quarter
Ended
12/31/08
  Quarter
Ended
12/31/07
  Total
Net
Change
Total
Net
Growth %
  Less
Acquisition
Revenues
  Internal
Net
Growth $
Internal
Net
Growth %
                             
Florida Retail 41,048  40,907  141  0.3  4,122  (3,981) (9.7)
National Retail   72,786    61,511    11,275  18.3    13,300    (2,025) (3.3)
Western Retail   24,722    21,158    3,564  16.8    5,999    (2,435) (11.5)
  Total Retail   138,556    123,576    14,980  12.1    23,421    (8,441) (6.8)
                             
Wholesale Brokerage   32,156    34,826    (2,670) (7.7)   2,088    (4,758) (13.7)
                             
Professional Programs   12,020    11,467    553  4.8      553  4.8 
Special Programs   33,887    31,253    2,634  8.4    186    2,448  7.8 
    Total National Programs   45,907    42,720    3,187  7.5    186    3,001  7.0 
                             
Services   8,305    7,977    328  4.1      328  4.1 
                             
Total Core Commissions and Fees (1)

224,924 


209,099 


15,825 

7.6 

25,695 

(9,870)

(4.7)


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


  Quarter
Ended
12/31/08
  Quarter
Ended
12/31/07
Total core commissions and fees (1) $ 224,924  $ 209,099 
Contingent commissions   4,930    1,945 
Divested business     2,150 
         
Total commission & fees $ 229,854  $ 213,194 

 (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)
    December 31,
2008
  December 31,
2007
ASSETS        
Current assets:        
  Cash and cash equivalents $       78,557  $      38,234 
  Restricted cash and investments   144,750    254,404 
  Short-term investments   7,511    2,892 
  Premiums, commissions and fees receivable   244,515    240,680 
  Deferred income taxes   14,171    17,208 
  Other current assets   33,528    33,964 
      Total current assets   523,032    587,382 
         
Fixed assets, net   63,520    62,327 
Goodwill   1,023,372    846,433 
Amortizable intangible assets, net   495,627    443,224 
Other assets   14,029    21,293 
      Total assets $ 2,119,580  $ 1,960,659 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities:        
  Premiums payable to insurance companies $    357,707  $    394,034 
  Premium deposits and credits due customers   43,577    41,211 
  Accounts payable   18,872    18,760 
  Accrued expenses   96,325    90,599 
  Current portion of long-term debt   6,162    11,519 
      Total current liabilities   522,643    556,123 
         
Long-term debt   253,616    227,707 
         
Deferred income taxes, net   90,143    65,736 
         
Other liabilities   11,437    13,635 
         
Shareholders’ equity:        
  Common stock, par value $0.10 per share; authorized 280,000 shares;  issued and outstanding 141,544 at 2008 and 140,673 at 2007  

14,154 
 

14,067 
  Additional paid-in capital   250,167    231,888 
  Retained earnings   977,407    851,490 
  Accumulated other comprehensive income   13    13 
         
      Total shareholders’ equity   1,241,741    1,097,458 
         
      Total liabilities and shareholders’ equity $ 2,119,580  $ 1,960,659 

Contact Information


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