Negative Fla. Growth Surprises Brown & Brown

Brown & Brown reported net income increased 15 percent in the third quarter, but earnings suffered as Florida retail nose-dived to negative-11 percent growth.

The Daytona Beach, Fla.-based insurance broker reported net growth in the third quarter of this year was down $4.6 million to $39 million compared with last year in its Florida retail market. Organic growth was off 12 percent in that market.

J. Hyatt Brown called the results "the biggest surprise in a long time. I don't remember any quarter where we have had a negative growth rate in Florida."

The broker's total commissions and fees were up 6 percent, or $12 million, to $217 million, but organic growth dropped 3 percent, primarily due to the soft market.

The main reason for the decline in the state was the drop in commissions, primarily from the state's residual insurer, Citizens--writing about 35 percent of the state's property market and inducing drops in premium rates.

Mr. Brown also noted that calm hurricane seasons over the past two years have resulted in 25-to-40 percent decreases from the record highs a few years ago.

The overall market throughout the country, he and other executives noted, is resulting in premium pricing declines anywhere from 5-to-45 percent, depending on market and location.

For the third quarter, Brown & Brown reported net income increased $6 million, to $46 million, or 33 cents a share. This was up 4 cents over the same period last year. Revenues rose 12 percent, or $25 million, to $237 million.

Net income for the nine months compared to last year rose 17 percent, or $23 million, to $158 million. Net income per share rose 16 cents to $1.12. Revenues rose 12 percent, or $79 million, to $742 million.

Jim W. Henderson, vice chairman and chief operating officer, said that as far as acquisitions are concerned, Brown & Brown has an advantage over private equity firms in access to capital.

The company said it has made 20 acquisitions in 2007, representing $81.8 million in annualized revenue so far this year--compared with 13 transactions representing $55.5 million for the same period last year.