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BROWN & BROWN, INC. Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 15, 2000
Period End
December 31, 1999
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 15, 2000. Cited figures are marked; the original filing is the authoritative source.

Brown & Brown, Inc. (NYSE: BRO) reported a solid 1999 with commissions and fees up 10.9% to $172.5 milliona and total revenues up 11.0% to $176.4 million.

Net income rose 16.4% to $27.2 millionb, and diluted EPS increased 16.5% to $1.98. Pre-tax margin improved to 25.1% from 23.9% in 1998, reflecting revenue growth and cost containment under the company's "Project 28" initiative, with other operating expenses falling to 19% of revenue from 20%. Much of the growth came from acquisitions.

Excluding acquisitions, commissions and fees grew only about 2%, reflecting the continuing soft market in property and casualty premium pricing. The balance sheet strengthened considerably. Long-term debt fell to $3.9 millionc from $17.4 million after the company repaid $17.1 million, and shareholders' equity rose to $103.0 million from $83.7 million.

Cash flow from operations was $39.7 milliond. The current ratio declined to 0.95, which management attributed to debt repayment. The company also deployed $18.2 million on acquisitions in 1999, and it maintains a $50 million revolving credit facility that was undrawn at year-end, with a maturity date of October 2000.

Investors should weigh several risks. The company is concentrated in Florida, and one insurance carrier accounted for roughly 14% of 1999 revenues. A pending Georgia lawsuit (Gresham & Associates) seeks at least $10 million in punitive damages, which management is contesting vigorously.

Revenue growth remains dependent on premium rates that management cannot control and that have been declining since the mid-1980s. The stock closed at $32.94 on March 3, 2000, and the annual dividend rose to $0.46 per share.

02—Key points

Key Highlights

  1. Total revenues grew 11.0% to $176.4 million, and net income increased 16.4% to $27.2 million in 1999.
  2. Diluted EPS rose 16.5% to $1.98, with pre-tax margin expanding to 25.1% from 23.9%.
  3. Organic commission growth was only about 2% in 1999, as soft property and casualty pricing offset acquisition-driven growth of 11% overall.
  4. Long-term debt was reduced from $17.4 million to $3.9 million, and shareholders' equity increased to $103.0 million.
  5. Operating cash flow of $39.7 million funded $18.2 million in acquisitions and $17.1 million in debt repayment.
  6. Revenue concentration is significant: Florida-based operations and one carrier representing about 14% of revenues.
  7. A Georgia lawsuit seeks at least $10 million in punitive damages, which the company is contesting vigorously.

03—Questions

Frequently Asked Questions

  1. How did Brown & Brown perform financially in 1999?

    Total revenues rose 11.0% to $176.4 million and net income grew 16.4% to $27.2 million, or $1.98 per share. Pre-tax margin improved to 25.1% from 23.9% in 1998, supported by revenue growth and cost controls.

  2. How much of the growth came from acquisitions rather than organic expansion?

    Most of it did. Commissions and fees increased 11% overall, but excluding acquisitions the increase was only about 2%. The company completed several pooling and purchase acquisitions in 1999, and management attributed the slow organic growth largely to declining property and casualty premium rates.

  3. What are the main risks to the business?

    Key risks include soft-market premium pricing that management cannot control, geographic concentration in Florida, dependence on one insurance carrier (about 14% of 1999 revenues), and the pending Gresham & Associates lawsuit seeking at least $10 million in punitive damages. Management believes the claims lack merit and is defending the case vigorously.

  4. How is the balance sheet positioned?

    Stronger than a year earlier. Long-term debt fell to $3.9 million from $17.4 million, and shareholders' equity rose to $103.0 million. The current ratio dropped to 0.95 because of the debt repayment. The company had no borrowings under its $50 million revolving facility at year-end, though that facility matures in October 2000.

  5. What returns have shareholders received?

    The annual dividend rose to $0.46 per share in 1999 from $0.41 in 1998, and the quarterly rate was increased to $0.13 in the fourth quarter. The stock closed at $32.94 on March 3, 2000, and traded in a 1999 range of roughly $29 to $41.

04—Continue

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