Brown & Brown Q1 Profit Up 18.4%

Brown & Brown Q1 Profit Up 18.4%

NU Online News Service, April 20, 4:10 p.m. EDT?Insurance broker Brown & Brown Inc., which continues to accept controversial insurer incentive fees, reported an 18.4 percent-higher quarterly profit, buttressed by revenue growth and further acquisitions of agency businesses. [@@]

The Daytona Beach, Fla.-based brokerage firm's 2005 first quarter profit was $43 million, up from $36.3 million one year ago.

Overall revenue for the quarter rose to $202.4 million, up 22.2 percent from $165.6 million a year ago. The broker recorded $200.3 million in commissions and fees for the quarter, up from $164.3 million last year.

The firm said its core commissions and fees for the quarter was $172.5 million, improving from $136.1 million. Brown & Brown, unlike mega-brokers who have dropped contingency commissions, continues to receive them its consolidated income statements show.

B&B received more contingent commissions during this year's first quarter than it did a year ago, $27.8 million versus $25.8 million last year. If Brown & Brown had scrapped contingent-fee arrangements this year, its first-quarter profit would have declined sharply, by more than 50 percent on a year-over-year basis.

Willis, Aon and Marsh brokerages stopped accepting the placement fees from insurers after investigators found they were serving as an incentive to improperly steer customers.

J. Hyatt Brown, chief executive officer of Brown & Brown, applauded his firm's quarterly results, saying the figures are even more rewarding when considering the current softening of commercial insurance premium rates.

He added: "Our goal is to maintain our intense focus on the execution of our stated game plan and to continue providing the very best possible service to our growing list of clients across the nation."

Also commenting on the brokerage firm's results, Brown & Brown Chief Operating Officer Jim W. Henderson remarked that in the mergers-and-acquisitions arena, 2005 has started "even better than we could have imagined." The firm, one of the 10-largest U.S. brokers, remains one of the most active buyers of independent agencies in the country.

"We completed several outstanding acquisitions during the first quarter, with estimated annualized revenues of $91.6 million," Mr. Henderson said. He said most of these acquired businesses already operate within his firm's desired operating profit percent range. "We will continue to exercise our dogged discipline to choose the best acquisition opportunities."