B&B Says Net Up As Carriers Hunt Business
By Mark E. Ruquet
NU Online News Service, Jan. 15, 3:18 p.m. EST?Brown & Brown reported net income rose 71 percent in 2003 and that rates are stabilizing as carriers are again beginning to market their products competitively. [@@]
For the year ending Dec. 31, 2003, net income increased $27 million, going from $83 million, or $1.22 a share, in 2002 to $110 million, or $1.60 a share. Revenues rose 21 percent, or $95.3 million, from $455.7 million to $551 million.
For the fourth quarter, net income increased 21 percent, or $4.4 million, from $21.4 million, or 31 cents a share, to $25.8 million, or 37 cents a share. Revenues rose $15.8 million, from $119 million to $134.9 million.
During an analyst's conference call reporting on Daytona Beach, Fla.-based insurance broker Brown & Brown Inc.'s fourth-quarter financial results, the firm's executives said that lower insurance rates are beginning to translate into increased commission rates and more attention from carriers.
J. Hyatt Brown, chairman and chief executive officer of the firm, said in answer to an analyst's question, whether the firm is realizing increased commissions, "We are now starting to see that."
Mr. Brown said in October the firm saw its first bonus commission on an account in some time, and other carriers are telling Brown & Brown that if they "write X number of additional dollars this year then we will give you X percent extra."
Jim W. Henderson, Brown & Brown president and chief operating officer, said for the first time in the last three or four years carriers are coming to the firm to discuss their plans for growth and are looking for the firm to help meet those goals. He said this differs from the past when brokers were pursuing business placements.
"We are seeing a slight turn in that scenario," he added.
Regarding premium prices, Mr. Brown said property-casualty rates remain soft as more business is moving from the nonstandard to standard market. Workers' compensation is stable, and markets are beginning to open up. The exception remains California.
With other lines such as umbrella, general liability and auto, the customer?s loss history is affecting prices, Mr. Brown said. A bad loss history translates into premium increases from 10 to 20 percent, he said. Good risks are seeing decreases in some cases. He said a lot of this has to do with "aggressive pricing practices" by regional insurers.
During the year, Brown & Brown opened three new offices in Los Angeles, Las Vegas and San Francisco, and the firm said it expects to see substantial business growth through these three.
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