Brown & Brown Quarterly Profit Down 8 Percent

NU Online News Service, April 20, 4:07 p.m. EDT

Brown & Brown reported first quarter profit for 2010 was down 8 percent as the recession continued to take a toll on insurance buying.

The Daytona Beach, Fla.-based insurance broker reported first quarter net income of $44 million, down $3.9 million from the same period last year. Earnings per share were off 3 cents to 31 cents a share.

Revenues during the period dropped 4 percent, or $11 million, to $252 million. The drop was due to a 5 percent decline in commission and fees, or $13 million, to $251 million.

Organic growth continued to show negative results, coming in at negative 8.6 percent.

On a positive note, the firm reported cash and cash equivalents increased 16 percent, or close to $32 million to $229 million.

Jim W. Henderson, vice chairman and chief operating officer for Brown & Brown said in a statement that the firm continues to aggregate cash "at record levels" and remains committed to its acquisition strategy in order to grow revenue. He added that improvements in the economy would improve the merger and acquisition environment in the future.

During a conference call with financial analysts, J. Powell Brown, president and chief executive officer, noted that the continued fallout from the recession is having a negative impact on the company's earnings as middle market buyers of insurance continue to purchase less coverage. He noted that there are pockets of improvement, but those pockets are typically to be found in cities and not across a region of the country.

Of the three retail groups the company detailed (Florida, National and Western) only National showed any increase in commissions and fees, growing a tiny 0.6 percent or $431, 00, to $78 million. Western stood at negative 12 percent, or $3 million, to $22 million. Florida was at almost negative 7 percent, down close to $3 million, to $37 million.

In a review of rates, Mr. Brown and Jim W. Henderson, vice chairman and chief operating officer, said rates for virtually all lines of business were flat to down as much as 20 percent, depending on the line of business and region of the county.

While employee benefits saw increases from 5 to as much as 20 percent from medical insurance, the increase was offset by a drop in the number of lives covered, said Mr. Brown.

"We feel good about our business, the results just haven't materialized because of the economic impacts," said Mr. Brown. "We know Florida will come back, just like the rest of the country; it just might take a little longer."