SOURCE: Brown & Brown, Inc.

Brown & Brown, Inc.

July 18, 2011 16:53 ET

Brown & Brown, Inc. Announces Second-Quarter Financial Results

DAYTONA BEACH, FL and TAMPA, FL--(Marketwire - Jul 18, 2011) - Brown & Brown, Inc. (NYSE: BRO) today announced its financial results for the second quarter of 2011.

Net income for the second quarter of 2011 was $37,035,000, or $0.26 per share, compared with $41,185,000, or $0.29 per share for the same quarter of 2010, a decrease of 10.1%. Total revenue for the second quarter ended June 30, 2011 was $246,816,000, compared with 2010 second-quarter revenue of $243,665,000, an increase of 1.3%.

Total revenue for the six months ended June 30, 2011 was $509,044,000, compared with total revenue for the first half of 2010 of $495,938,000. Net income for the six-month period ended June 30, 2011 was $83,328,000, or $0.57 per share, compared with $85,313,000, or $0.59 per share for the same period of 2010.

J. Powell Brown, President and Chief Executive Officer of Brown & Brown, Inc., noted, "We were challenged this quarter by $4.2 million less in profit-sharing contingency commissions. This is largely a reflection of rising loss ratios of property and casualty insurance carriers across the U.S. We are pleased with the continued incremental improvements in certain segments of our business, most notably the second consecutive quarter of positive internal revenue growth in our Wholesale Brokerage Division."

Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance and reinsurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third party administration, and other services. Serving business, 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 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; and the potential occurrence of a disaster that affects certain areas of the States of California, Florida, Indiana, Michigan, New Jersey, New York, Pennsylvania, Texas and/or Washington, where significant portions of the Company's business are concentrated. 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
June 30
For the
Six Months Ended
June 30
2011 2010 2011 2010
REVENUES
Commissions and fees $ 245,983 $ 241,053 $ 507,435 $ 491,727
Investment income 393 346 617 677
Other income, net 440 2,266 992 3,534
Total revenues 246,816 243,665 509,044 495,938
EXPENSES
Employee compensation and benefits 125,852 121,372 252,409 243,555
Non-cash stock-based compensation 2,709 1,780 5,482 3,735
Other operating expenses 34,979 33,622 71,055 69,955
Amortization 13,556 12,650 27,065 25,203
Depreciation 3,079 3,129 6,214 6,382
Interest 3,608 3,632 7,215 7,240
Change in estimated acquisition earn-out payables
1,565

(533
) 1,466 (1,229 )
Total expenses 185,348 175,652 370,906 354,841
Income before income taxes 61,468 68,013 138,138 141,097
Income taxes 24,433 26,828 54,810 55,784
Net income $ 37,035 $ 41,185 $ 83,328 $ 85,313
Net income per share:
Basic $ 0.26 $ 0.29 $ 0.58 $ 0.60
Diluted $ 0.26 $ 0.29 $ 0.57 $ 0.59
Weighted average number of shares outstanding:
Basic 138,379 137,685 138,365 137,654
Diluted 139,942 139,105 140,950 138,937
Dividends declared per share $ 0.0800 $ 0.0775 $ 0.1600 $ 0.1550
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended June 30, 2011
(in thousands)
(unaudited)
Quarter
Ended
06/30/11
Quarter
Ended
06/30/10
Total
Net
Change
Total
Net
Growth %
Less
Acqui-
sition
Revenues
Internal
Net
Growth $
Internal
Net
Growth %
Florida Retail $ 44,361 $ 42,735 $ 1,626 3.8 % $ 2,107 $ (481 ) (1.1 )%
National Retail 83,102 79,359 3,743 4.7 % 10,145 (6,402 ) (8.1 )%
Western Retail 24,991 23,334 1,657 7.1 % 2,520 (863 ) (3.7 )%
Total Retail 152,454 145,428 7,026 4.8 % 14,772 (7,746 ) (5.3 )%
Professional Programs 8,839 9,343 (504 ) (5.4 )% - (504 ) (5.4 )%
Special Programs 24,582 27,827 (3,245 ) (11.7 )% 91 (3,336 ) (12.0 )%
Total National Programs 33,421 37,170 (3,749 ) (10.1 )% 91 (3,840 ) (10.3 )%
Wholesale Brokerage 41,713 41,298 415 1.0 % - 415 1.0 %
Services 16,120 9,729 6,391 65.7 % 6,468 (77 ) (0.8 )%
Total Core Commissions
and Fees
(1)
$
243,708
$
233,625
$
10,083

4.3
% $
21,331
$
(11,248
)
(4.8
)%
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
For the Three Months Ended June 30, 2011 and 2010
(in thousands)
(unaudited)
Quarter
Ended
06/30/11
Quarter
Ended
06/30/10
Total core commissions and fees(1) $ 243,708 $ 233,625
Contingent commissions 2,275 6,444
Divested business - 984
Total commission & fees $ 245,983 $ 241,053

(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)
June 30, December 31,
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 278,866 $ 272,984
Restricted cash and investments 120,073 123,594
Short-term investments 7,737 7,678
Premiums, commissions and fees receivable 247,718 214,446
Deferred income taxes 8,143 20,076
Other current assets 34,524 14,031
Total current assets 697,061 652,809
Fixed assets, net 60,039 59,713
Goodwill 1,261,627 1,194,827
Amortizable intangible assets, net 488,367 481,900
Other assets 17,778 11,565
Total assets $ 2,524,872 $ 2,400,814
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 358,913 $ 311,346
Premium deposits and credits due customers 24,992 28,509
Accounts payable 31,805 33,693
Accrued expenses and other liabilities 85,637 94,947
Current portion of long-term debt 1,624 1,662
Total current liabilities 502,971 470,157
Long-term debt 250,067 250,067
Deferred income taxes, net 159,900 146,482
Other liabilities 39,003 27,764
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding 142,924 at 2011 and 142,795 at 2010


14,292


14,279
Additional paid-in capital 293,081 286,997
Retained earnings 1,265,553 1,205,061
Accumulated other comprehensive income 5 7
Total shareholders' equity 1,572,931 1,506,344
Total liabilities and shareholders' equity $ 2,524,872 $ 2,400,814

Contact Information

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