J. Hyatt Brown is the chairman – and for over 50 years, thedriving force behind – Brown & Brown Insurance.
B&B was founded by Brown's father and a cousin in 1939 as Brown& Owen. The name changed to Brown & Brown in 1955, and J.Hyatt Brown joined the firm in 1959 after his graduation from theUniversity of Florida. He bought the agency in 1961 and took thecompany public in 1993 via a merger with William Poe's Poe &Associates of Tampa. He assumed full control of the new entity in1993. The family lineage continues at the company's dualheadquarters with son J. Powell Brown as current president and CEO,based in Daytona Beach, and son P. Barrett Brown as profit centerleader of the Tampa retail operation.

Renowned for a 14-year run of double-digit bottom-line growth,successive years of increasing dividends, and customer retentionrates above 90 percent, B&B ranks as one of the largestindependent insurance intermediaries in the U.S. The companycurrently employs 5,200+ people in 180 locations.

Given his remarkable career in Florida's insurance market andthe political arena (he was a member of the Florida House ofRepresentatives from 1972 to 1980, and Speaker of the House from1978 to 1980), Brown has a unique perspective from which to viewour industry.

Q. B&B's has grown primarily through the acquisition ofsuccessful, geographically diverse, small- to mid-sized agenciesthroughout the country. The company spent $26.5 million on mergersand acquisitions last year, even in a universally dismal economy.What are the most important attributes you look for in a companyyou are considering acquiring? Do you subscribe to the WarrenBuffet philosophy of “Be fearful when others are greedy. Be greedywhen others are fearful?”

A. Not necessarily. We are always looking for good people whoare honest, hard-working and would like to join a large firm thatcould help them grow financially and professionally. Brown &Brown has four divisions: retail, wholesale, programs, andservices, so as opportunities become available in those areas weare always interested. Our business is primarily commission-based,as opposed to fees. Large concentrations of business in single-lineor risk-type can be a matter of concern but may not be a dealbreaker.

In many situations, the senior owner and largest shareholder ofan agency is looking to retire, therefore opening the possibilityfor another leader or leaders to step up and continue to operatethe business successfully. These scenarios are always difficult toanalyze from the outside looking in.

Q. Although your company reported some dropping revenues in therecent past (a rarity for B&B), the last two quarters arelooking up. Talk about the challenges all businesses face intoday's economic environment, and internal growth versus growth byacquisition.

A. Brown & Brown recorded negative organic growth in 2008and 2009. Never before has this happened in our 76-year history.The worst hit states were Florida, Arizona, Nevada, and California.The economy has been the largest single factor, plus decliningP&C rates in the 38 states in which we do business. Our M&Aactivity in 2009 produced approximately $26 million of purchasedrevenues, which was the lowest M&A rate since 2000. The economyis starting to bottom in many of our key states, which is goodnews. P&C pricing will continue to be discounted over therenewal rates on most accounts. With over $500 billion of capitaland surplus in the U.S. P&C industry (premiums in 2009 wereapproximately $490 billion) we will continue to see price erosionuntil 2013 — maybe! This condition makes M&A activity morerisky than in the last 10 years.

Q. If you were starting out today, would you repeat thedecentralized business model that allows decisions to be made bylocal-level managers and limits bureaucratic interference, whiledemanding performance-to-profit results that, while motivating,possibly resembles “tough love?”

A. Absolutely. Decentralization is the most efficient operatingmodel, and it is very attractive to those merger candidates whowant to be able to personally affect their future as opposed tobeing sucked up into the maw of a large, centralized company.

Q. One of B&B's subsidiaries is the reinsurance broker AxiomRe. Give us some insight into what that market looks like todaynationally and in Florida.

A. Axiom Re is doing well in their reinsurance niche.Reinsurance pricing is also headed south as regards P&Cbusiness.

Q. The 2010 Legislature passed, and then Gov. Charlie Cristsubsequently vetoed, the omnibus property bill SB 2044. The Floridaproperty insurance market remains problematic, to say the least. Ifyou could magically solve our homeowners' insurance problems, howwould you go about it?

A. Time and tide have a tendency to level all playing fields. Wemust allow risk bearers to price their homeowners' productsproperly in order to survive when the wind blows. Citizens'assessments would be a tsunami to Florida policyholders if we havea bad hurricane year in 2010. Short-term solution: Pray.

Q. You have been both a participant and an observer of thepolitical scene. Describe — from a problem-solving perspective —the kind of leaders Florida needs to deal with the significantproblems we face.

A. Florida needs intelligent, hardworking problem solvers in allelected and appointed positions. A major problem facing thoseelected and appointed men and women is the animus created bydog-eat-dog partisanship. When I retired from the Legislature in1980, both parties had respect for each other, and even though wehad differences, they were solved in most cases with intelligentdecisions that were generally accepted by most in both parties. Themost important function of the two-party system is to organizeelections. The gerrymandering of districts has produced aleft/right polarization that exacerbates the problems in terms ofbringing both parties to the middle, which is where most Floridiansand Americans reside.

Q. Based on your years of experience, if there were one thingyou could change in Florida's insurance universe, what would itbe?

A. Insurance regulation in Florida has been pretty even handedover the last 51 years that I have been actively involved. The onlyreal potential horror story is the huge build up of hurricaneexposure in Citizens as a result of reducing rates without regardto actuarial soundness. Hopefully we will skate by (with no serioushurricanes) for 3 to 4 years and allow the private market to assumea large portion of the exposures at sustainable pricing.