SOURCE: Brown & Brown, Inc.

October 20, 2008 17:04 ET

Brown & Brown, Inc. Announces an 8.1% Increase in Commissions and Fees Revenues

DAYTONA BEACH, FL and TAMPA, FL--(Marketwire - October 20, 2008) - Brown & Brown, Inc. (NYSE: BRO) today announced its net income and net income per share for the third quarter of 2008. Additionally, it announced that its total commissions and fees revenues for the third quarter of 2008 increased 8.1% over the third quarter of 2007.

Net income for the third quarter of 2008 was $40,593,000, or $0.29 per share, compared with $46,216,000, or $0.33 per share for the same quarter of 2007. Total revenues for the third quarter ended September 30, 2008 were $247,029,000, compared with 2007 third-quarter revenue of $237,284,000.

Total revenues for the nine months ended September 30, 2008 were $745,464,000, compared with the total revenues for the first nine months of 2007 of $742,441,000. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in the first nine months of 2007, total revenues for the nine-month period of 2008 increased 3.0% over the adjusted total revenues in the corresponding period of 2007, which equaled $723,778,000. Net income for the nine-month period ended September 30, 2008 was $132,751,000, or $0.94 per share, compared with $157,955,000, or $1.12 per share for the same period of 2007. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in the first nine months of 2007, net income for the nine-month period ended September 30, 2008 was $132,751,000 compared to the adjusted net income for the comparable period in 2007 of $146,542,000.

J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "We are pleased with our third-quarter results as our industry continues to stare into the abyss of falling rates for property and casualty coverages. The joker in the deck on a forward-looking basis is the economy. Notwithstanding the course of recent events, we remain optimistic about the future."

Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "Since the second quarter of 2008 we closed on 14 transactions, representing $22.4 million in estimated annualized revenues. For the year, we have closed 44 transactions with estimated annualized revenues of $100.2 million. Soft market conditions and a challenging economy are factors prompting a favorable increase in M&A activity."

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, 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
                 (in thousands, except per share data)
                              (unaudited)


                                   For the Three Months For the Nine Months
                                     Ended September 30  Ended September 30
                                    ------------------- -------------------
                                      2008      2007      2008      2007
                                    --------- --------- --------- ---------
REVENUES
Commissions and fees                $ 243,766 $ 225,421 $ 736,129 $ 701,456
Investment income                       1,228     3,286     5,136    27,855
Other income, net                       2,035     8,577     4,199    13,130
                                    --------- --------- --------- ---------
      Total revenues                  247,029   237,284   745,464   742,441
                                    --------- --------- --------- ---------

EXPENSES
Employee compensation and benefits    122,172   110,491   363,873   333,937
Non-cash stock-based compensation       1,819     1,491     5,563     4,327
Other operating expenses               36,405    32,928   101,993    96,409
Amortization                           12,281    10,331    34,789    29,798
Depreciation                            3,391     3,213     9,929     9,492
Interest                                3,867     3,395    11,045    10,445
                                    --------- --------- --------- ---------
      Total expenses                  179,935   161,849   527,192   484,408
                                    --------- --------- --------- ---------

Income before income taxes             67,094    75,435   218,272   258,033

Income taxes                           26,501    29,219    85,521   100,078
                                    --------- --------- --------- ---------

Net income                          $  40,593 $  46,216 $ 132,751 $ 157,955
                                    ========= ========= ========= =========

Net income per share:
   Basic                            $    0.29 $    0.33 $    0.94 $    1.13
                                    ========= ========= ========= =========
   Diluted                          $    0.29 $    0.33 $    0.94 $    1.12
                                    ========= ========= ========= =========

Weighted average number of shares
 outstanding:
   Basic                              141,073   140,593   140,834   140,401
                                    ========= ========= ========= =========
   Diluted                            141,606   141,288   141,395   141,209
                                    ========= ========= ========= =========

Dividends declared per share        $    0.07 $    0.06 $    0.21 $    0.18
                                    ========= ========= ========= =========




                            Brown & Brown, Inc.
                         INTERNAL GROWTH SCHEDULE
                        Core Commissions and Fees(1)
                   Three Months Ended September 30, 2008
                             (in thousands)
                               (unaudited)


                                 Quarter    Quarter               Total
                                  Ended      Ended    Total Net    Net
                                 9/30/08    9/30/07    Change    Growth %
                                ---------- ---------- ---------  --------

Florida Retail                  $   40,087 $   39,088 $     999       2.6%
National Retail                     77,172     60,958    16,214      26.6%
Western Retail                      27,293     23,752     3,541      14.9%
                                ---------- ---------- ---------
   Total Retail                    144,552    123,798    20,754      16.8%
                                ---------- ---------- ---------

Wholesale Brokerage                 36,491     39,328    (2,837)     (7.2)%

Professional Programs               11,643     11,200       443       4.0%
Special Programs                    33,433     30,411     3,022       9.9%
                                ---------- ---------- ---------
Total National Programs             45,076     41,611     3,465       8.3%
                                ---------- ---------- ---------

Services                             7,917      9,390    (1,473)    (15.7)%
                                ---------- ---------- ---------

Total Core Commissions and
 Fees (1)                       $  234,036 $  214,127 $  19,909       9.3%
                                ========== ========== =========




                                  Less     Internal   Internal
                               Acquisition   Net        Net
                                 Revenues  Growth $   Growth %
                                ---------- ---------  --------

Florida Retail                  $    4,620 $  (3,621)     (9.3)%
National Retail                     16,802      (588)     (1.0)%
Western Retail                       5,473    (1,932)     (8.1)%
                                ---------- ---------
   Total Retail                     26,895    (6,141)     (5.0)%
                                ---------- ---------

Wholesale Brokerage                  3,831    (6,668)    (17.0)%

Professional Programs                    -       443       4.0%
Special Programs                       210     2,812       9.2%
                                ---------- ---------
Total National Programs                210     3,255       7.8%
                                ---------- ---------

Services                                 -    (1,473)    (15.7)%
                                ---------- ---------

Total Core Commissions and
 Fees (1)                       $   30,936 $ (11,027)     (5.1)%
                                ========== =========




                 Reconciliation of Internal Growth Schedule
                       to Total Commissions and Fees
              Included in the Consolidated Statements of Income
            for the Three Months Ended September 30, 2008 and 2007
                                (in thousands)
                                  (unaudited)


                                                        Quarter   Quarter
                                                         Ended     Ended
                                                        9/30/08   9/30/07
                                                       --------- ---------
Total core commissions and fees(1)                     $ 234,036 $ 214,127
Contingent commissions                                     9,730     8,875
Divested business                                              -     2,419
                                                       --------- ---------

Total commission & fees                                $ 243,766 $ 225,421
                                                       ========= =========


(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)




                                                    Sept. 30,  December 31,
                                                       2008        2007
                                                    ----------- -----------
ASSETS
Current assets:
   Cash and cash equivalents                        $         - $    38,234
   Restricted cash and investments                      240,616     254,404
   Short-term investments                                 7,287       2,892
   Premiums, commissions and fees receivable            256,479     240,680
   Deferred income taxes                                      -      17,208
   Other current assets                                  35,846      33,964
                                                    ----------- -----------
      Total current assets                              540,228     587,382

Fixed assets, net                                        63,673      62,327
Goodwill                                                995,720     846,433
Amortizable intangible assets, net                      493,737     443,224
Other assets                                             13,943      21,293
                                                    ----------- -----------
      Total assets                                  $ 2,107,301 $ 1,960,659
                                                    =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Premiums payable to insurance companies          $   390,616 $   394,034
   Premium deposits and credits due customers            48,352      41,211
   Accounts payable                                      16,814      18,760
   Accrued expenses                                      77,488      90,599
   Current portion of long-term debt                      7,703      11,519
                                                    ----------- -----------
      Total current liabilities                         540,973     556,123

Long-term debt                                          253,655     227,707

Deferred income taxes, net                               83,972      65,736

Other liabilities                                        11,912      13,635

Shareholders' equity:
   Common stock, par value $0.10 per share;
    authorized 280,000 shares; issued and
    outstanding 141,412 at 2008 and 140,673
    at 2007                                              14,141      14,067
   Additional paid-in capital                           247,988     231,888
   Retained earnings                                    954,647     851,490
   Accumulated other comprehensive income                    13          13
                                                    ----------- -----------

      Total shareholders' equity                      1,216,789   1,097,458
                                                    ----------- -----------

      Total liabilities and shareholders' equity    $ 2,107,301 $ 1,960,659
                                                    =========== ===========

Contact Information

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