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BROWN & BROWN, INC. Annual Report, Year Ended Dec 31, 1995

Filing Date
Filed March 20, 1996
Period End
December 31, 1995
Security
BRO
In the record · 2016–202610-K1210-Q388-K126

BRO filed 12 annual reports (10-K), 38 quarterly reports (10-Q) and 126 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Mar ’17Mar ’17
  2. Material agreement8-K · Mar ’19Mar ’19
  3. Leadership change8-K · Dec ’21Dec ’21
  4. Leadership change8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed March 20, 1996. Cited figures are marked; the original filing is the authoritative source.

This Form 10-K is for Poe & Brown, Inc. (Nasdaq: POBR), a Florida-based general insurance agency, not Brown & Brown, Inc. (NYSE: BRO) as the request header states.

The company formed from a 1993 merger of Poe & Associates and Brown & Brown, Inc. It earns commissions and fees, and does not underwrite risk. For fiscal 1995, commissions and fees rose 6% to $102.0 milliona, total revenues reached $106.4 million, and net income rose about 9% to $14.8 million, or $1.70 per share. Pre-tax margin improved to 21.9% from 20.3%, and total expenses fell to 78.1% of revenue from 79.7%.

Management attributes the gains to acquisitions, operating efficiencies, and lower interest expense from debt repayment, while noting that a multi-year soft market in premium rates continues to pressure revenue. The balance sheet strengthened over the year. Shareholders' equity grew to $54.4 millionb from $44.1 million, long-term debt was reduced to about $8.8 million, and cash rose to $28.4 million.

Operating cash flow was $21.2 millionc, and the company paid $0.48 per share in dividends. Intangibles of $36.6 million are a significant asset, which investors should keep in mind if acquisition pricing or customer-account values weaken. Key risks include concentration in Florida, with about 24% of revenue from one insurance carrier (CNA-underwritten programs), an $11.2 million Puerto Rico lawsuit that management says insurance should cover, and the ongoing soft market.

The company said its resources are sufficient through at least the end of 1996. At the March 4, 1996 price of $25.25d, non-affiliate market value was about $161.7 million.

02—Key points

Key Highlights

  1. Revenue growth: Total revenues rose 4.7% to $106.4 million in 1995. Commissions and fees grew 6.4% to $102.0 million, and organic growth (excluding acquisitions) was about 3%.
  2. Profitability: Net income rose 9.5% to $14.8 million ($1.70 per share, up from $1.56). Pre-tax margin reached 21.9%, up from 20.3% in 1994 and 13.3% in 1993.
  3. Cost discipline: Total expenses fell to 78.1% of revenue from 79.7% in 1994 and 86.7% in 1993, driven by merger efficiencies and lower interest costs.
  4. Balance sheet: Shareholders' equity increased to $54.4 million from $44.1 million. Long-term debt declined to about $8.8 million, and cash and equivalents rose to $28.4 million.
  5. Concentration risk: Roughly 24% of 1995 revenue came from policies underwritten by one insurer, and the business is concentrated in Florida.
  6. Diversified segments: The Retail Division produced 58% of commission and fee revenue, National Programs 27%, Service 11%, and Brokerage 4%.
  7. Legal and tax matters: A $11.2 million Puerto Rico lawsuit is being contested, and the IRS dispute was fully settled in 1995 for about $349,000 in payments, with a $451,000 reserve release.

03—Questions

Frequently Asked Questions

  1. Which company does this 10-K filing cover, and how does it relate to Brown & Brown (BRO)?

    The filing is for Poe & Brown, Inc. (Nasdaq: POBR), headquartered in Daytona Beach, Florida. Brown & Brown, Inc. was a privately held agency that merged into Poe & Associates in April 1993 and is one of the companies that formed Poe & Brown. The filing does not cover the NYSE-listed Brown & Brown (BRO) that investors know today.

  2. How did earnings and revenue trend in 1995?

    Net income increased to $14.8 million ($1.70 per share) from $13.5 million ($1.56) in 1994. Total revenues increased to $106.4 million from $101.6 million. The 1994 results included a $2.2 million gain on a Rock-Tenn stock sale that did not recur, so underlying earnings growth was stronger than the headline figures suggest.

  3. What are the main risks to the business?

    The main risks are the soft property and casualty pricing cycle, which has pushed commissions and renewal rates flat to down since 1986; heavy dependence on a single carrier for about 24% of revenue; geographic concentration in Florida; and the pending $11.2 million Puerto Rico lawsuit. Management says insurance would cover any judgment, and the company intends to contest the claim vigorously.

  4. Is the company financially stable enough to support its dividend and operations?

    Yes, based on the filing. Operating cash flow was $21.2 million in 1995, debt was reduced, and cash rose to $28.4 million. Dividends of $4.1 million were paid, about 28% of net income. The working capital ratio improved to 1.13 to 1.0, and management believes existing resources and credit lines are sufficient through at least the end of 1996.

  5. What does the company's growth strategy depend on?

    Growth depends on acquisitions and new business production. In 1995 the company acquired Insurance West (a pooling merger) plus four agencies and a brokerage firm for about $7.25 million, and in January 1996 it acquired 75% of Florida Intracoastal Underwriters. Continued growth will depend on successful integration of these acquisitions and on new proprietary insurance programs for niche professional markets.

04—Continue

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