SOURCE: Brown & Brown, Inc.

February 11, 2007 15:00 ET

Brown & Brown, Inc. Results for 2006 Set Records for Revenues and Net Income

DAYTONA BEACH, FL and TAMPA, FL -- (MARKET WIRE) -- February 11, 2007 --Brown & Brown, Inc. (NYSE: BRO) today announced record earnings for 2006. Net income for 2006 rose to $172,350,000, or $1.22 per share, an increase of 14.5% over the $150,551,000, or $1.08 per share, earned in 2005. Total revenues for the year rose to $878,004,000, up 11.7% compared with $785,807,000 achieved in 2005.

During the fourth quarter of 2006 net income increased 5.3%, to $37,623,000, or $0.27 per share, compared with 2005 fourth quarter net income of $35,717,000, or $0.25 per share. Total revenue for the fourth quarter of 2006 was $214,650,000, a 9.0% increase over the fourth quarter 2005 revenues of $196,857,000.

Commenting on the results, J. Hyatt Brown, Chairman and Chief Executive Officer, said, "2006 was another good year for Brown & Brown. In a year with many challenges, including a lighter than normal year of completed acquisitions, our solid internal revenue growth was instrumental in raising our total revenue by nearly 12%. As a result, part of our intermediate goal, 'B-40,' of achieving one billion dollars of revenues now appears within reach and has our entire Company focused on delivering even stronger results in 2007."

Jim W. Henderson, Vice-Chairman and Chief Operating Officer, commented, "During 2006, completed acquisitions accounted for approximately $56 million in annualized revenues, with Axiom Re and Delaware Valley Underwriting Authority accounting for the majority of that amount. By the same token, just in this past week we closed three transactions: ALCOS, Inc., in Michigan, Shapiro Insurance, Inc. in Tallahassee and the Marcello Agency, Inc. in Louisiana, totaling some $23 million in annualized revenues. The acquisition opportunities continue to be robust."

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, 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 continuing our revenue, earnings and operating growth, as well as 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 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, New Jersey, New York, Pennsylvania and/or Washington, where significant portions of the Company's business are concentrated; the actual costs of resolution of contingent liabilities; those factors relevant to Brown & Brown's consummation and integration of announced acquisitions, including any matters analyzed in the due diligence process, material adverse changes in the customers of the companies whose operations are acquired, and material adverse changes in the business and financial condition of either or both companies and their respective customers; and the cost and impact on the Company of previously disclosed litigation initiated against the Company and 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       For the Twelve
                                      Months Ended          Months Ended
                                       December 31          December 31
                                    ------------------- -------------------
                                      2006      2005      2006      2005
                                    --------- --------- --------- ---------
REVENUES
Commissions and fees                $ 210,763 $ 194,046 $ 864,663 $ 775,543
Investment income                       3,096     2,303    11,479     6,578
Other income, net                         791       508     1,862     3,686
                                    --------- --------- --------- ---------
   Total revenues                     214,650   196,857   878,004   785,807
                                    --------- --------- --------- ---------

EXPENSES
Employee compensation and benefits    100,160    96,450   404,891   374,943
Non-cash stock-based compensation         815       977     5,416     3,337
Other operating expenses               35,887    26,862   126,492   105,622
Amortization                            9,431     8,901    36,498    33,245
Depreciation                            3,007     2,629    11,309    10,061
Interest                                3,277     3,578    13,357    14,469
                                    --------- --------- --------- ---------
   Total expenses                     152,577   139,397   597,963   541,677
                                    --------- --------- --------- ---------

Income before income taxes             62,073    57,460   280,041   244,130

Income taxes                           24,450    21,743   107,691    93,579
                                    --------- --------- --------- ---------

   Net income                       $  37,623 $  35,717 $ 172,350 $ 150,551
                                    ========= ========= ========= =========

Net income per share:
   Basic                            $    0.27 $    0.26 $    1.23 $    1.09
                                    ========= ========= ========= =========
   Diluted                          $    0.27 $    0.25 $    1.22 $    1.08
                                    ========= ========= ========= =========

Weighted average number of shares
 outstanding:
   Basic                              139,969   139,126   139,634   138,563
                                    ========= ========= ========= =========
   Diluted                            141,227   140,443   141,020   139,776
                                    ========= ========= ========= =========

Dividends declared per share        $    0.06 $    0.05 $    0.21 $    0.17
                                    ========= ========= ========= =========




                           Brown & Brown, Inc.
                        INTERNAL GROWTH SCHEDULE
                      Core Commissions and Fees(1)
                  Three Months Ended December 31, 2006
                            (in thousands)
                              (unaudited)



                                                Total             Internal
               Quarter    Quarter                Net     Less       Net
                Ended      Ended    Total Net  Growth  Acquisition Growth
               12/31/06   12/31/05    Change      %      Revenues    %
              ---------- ---------- ---------  ------   ---------- ------

Florida
 Retail       $   45,513 $   39,546 $   5,967    15.1 % $        3   15.1 %
National
 Retail           49,505     48,918       587     1.2 %      1,422   (1.7)%
Western
 Retail           24,875     26,473    (1,598)   (6.0)%        626   (8.4)%
              ---------- ---------- ---------           ----------
   Total
    Retail       119,893    114,937     4,956     4.3 %      2,051    2.5 %
              ---------- ---------- ---------           ----------

Professional
 Programs         10,599     10,497       102     1.0 %         43    0.6 %
Special
 Programs         33,302     26,735     6,567    24.6 %      2,650   14.7 %
              ---------- ---------- ---------           ----------
   Total
    Programs      43,901     37,232     6,669    17.9 %      2,693   10.7 %
              ---------- ---------- ---------           ----------

Wholesale
 Brokerage        37,382     33,456     3,926    11.7 %      6,210   (6.8)%

Services           8,702      6,911     1,791    25.9 %      1,540    3.6 %
              ---------- ---------- ---------           ----------

Total Core
 Commissions
 and Fees (1) $  209,878 $  192,536 $  17,342     9.0 % $   12,494    2.5 %
              ========== ========== =========  ======   ========== ======


               Reconciliation of Internal Growth Schedule
                   to Total Commissions and Fees
          Included in the Consolidated Statements of Income
        for the Three Months Ended December 31, 2006 and 2005
                          (in thousands)
                            (unaudited)


                                                         Quarter   Quarter
                                                          Ended     Ended
                                                        12/31/06  12/31/05
                                                        --------- ---------
 Total core commissions and fees(1)                     $ 209,878 $ 192,536
 Contingent commissions                                       885       567
 Divested business                                              -       943
                                                        --------- ---------

 Total commission & fees                                $ 210,763 $ 194,046
                                                        ========= =========


(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, December 31,
                                                     2006         2005
                                                  -----------  -----------
ASSETS
Current assets:
  Cash and cash equivalents                       $    88,490  $   100,580
  Restricted cash and investments                     242,187      229,872
  Short-term investments                                2,909        2,748
  Premiums, commissions and fees receivable           282,440      257,930
  Other current assets                                 32,180       28,637
                                                  -----------  -----------
    Total current assets                              648,206      619,767

Fixed assets, net                                      44,170       39,398
Goodwill                                              684,521      549,040
Amortizable intangible assets, net                    396,069      377,907
Investments                                            15,826        8,421
Other assets                                           19,160       14,127
                                                  -----------  -----------
    Total assets                                  $ 1,807,952  $ 1,608,660
                                                  ===========  ===========

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
  Premiums payable to insurance companies         $   435,449  $   397,466
  Premium deposits and credits due customers           33,273       34,027
  Accounts payable                                     17,854       21,161
  Accrued expenses                                     86,009       74,534
  Current portion of long-term debt                    18,082       55,630
                                                  -----------  -----------
    Total current liabilities                         590,667      582,818

Long-term debt                                        226,252      214,179

Deferred income taxes, net                             49,721       35,489

Other liabilities                                      11,967       11,830

Shareholders’ equity:
  Common stock, par value $0.10 per
   share; authorized 280,000 shares; issued
   and outstanding 140,016 at 2006 and 139,383 at
   2005                                                14,002       13,938
  Additional paid-in capital                          210,543      193,313
  Retained earnings                                   695,656      552,647
  Accumulated other comprehensive income                9,144        4,446
                                                  -----------  -----------

    Total shareholders’ equity                        929,345      764,344
                                                  -----------  -----------

    Total liabilities and shareholders’ equity    $ 1,807,952  $ 1,608,660
                                                  ===========  ===========

Contact Information

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