Brown & Brown: Hull Deal Cost $175M

By Mark E. Ruquet

NU Online News Service, March 17, 4:06 p.m. EST?Brown & Brown brokerage's continuing acquisition spree saw it spend $233 million to acquire 21 agencies and books of business in the first quarter, according to a company filing.[@@]

The Daytona Beach, Fla.-based firm's annual form 10-K filing with the Securities and Exchange Commission yesterday also revealed it has been served with 18 subpoenas from regulators probing whether the broker accepted any illicit fees to steer business to insurers.

On the acquisition front, Brown & Brown reported its biggest purchase outlay as $175 million to acquire Hull & Company Inc., a major wholesale brokerage operation.

In addition to the Hull & Company buy, which was completed March 3, the firm said it paid $23.7 million for American Specialty Companies of Roanoke, Ind., and $10.2 million for Braishfield Associates Inc., based in Orlando, Fla.

American Specialty provides insurance and risk services for the sports and entertainment industry. Braishfield is a wholesale broker.

The first three months of 2005 spending rivals all of 2004 for the firm, which reported an outlay of $199.3 million on 29 acquisitions that year.

The most paid that year was $31 million for Proctor Financial Inc. and $30.4 million for Waldor Agency Inc.

Brown & Brown said that its formula for payment for acquisitions is based upon a multiple of operating profit earned over a one-to-three-year period.

Brown & Brown said that Hull & Company has annualized net revenues of $63 million.

For 2004, the broker reported net income of less than $129 million, or $1.86 a share on revenues of $647 million.

On the litigation front, Brown & Brown said it has received requests for information or subpoenas seeking information about producer compensation arrangements from 18 states.

The firm said there has been no charge of alleged wrongdoing or violation of state law in any of the states.

The inquiries flowed from an investigation by New York Attorney General Eliot Spitzer into insurance brokerage transactions that involved price-fixing with insurers who made undisclosed fee arrangement to have brokers steer business their way.

The New York investigations have led to settlements with Mr. Spitzer's office by Marsh & McLennan and Aon totaling more than $1 billion in compensation to be paid to clients for alleged abuses.

Special Reports /

Brown & Brown: Hull Deal Cost $175M

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