10-KPeriod: FY2000

BROWN & BROWN, INC. Annual Report, Year Ended Dec 31, 2000

Filed March 14, 2001For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) operates as a diversified insurance brokerage and agency, deriving its revenue primarily from commissions and fees. For the fiscal year ended December 31, 2000, the company reported strong revenue growth, a portion of which was driven by significant acquisitions, most notably the Riedman Corporation acquisition finalized in early 2001, which substantially expanded its geographic footprint and operational scale. During 2000, the insurance market experienced a favorable shift towards increased premium rates after a prolonged "soft market." Brown & Brown capitalized on this environment, which, combined with its ongoing new business development and acquisition strategy, contributed to its financial performance. The company's business is segmented into four divisions: Retail, National Programs, Service, and Brokerage, each contributing to its diversified revenue streams. Investors should note the company's active M&A strategy as a key driver of growth and integration, alongside its established programs and service offerings.

Key Highlights

  • 1Significant acquisition of Riedman Corporation in early 2001 expanded operations to 108 locations across 24 states.
  • 2The company operated in an environment of increasing premium rates throughout 2000, a positive shift after years of declining rates.
  • 3Total commission and fee revenues reached $204.862 million in 2000, an increase from prior years.
  • 4Retail Division remains the largest revenue contributor, accounting for 70.3% of total commission and fee revenues in 2000.
  • 5Brown & Brown employs a diversified strategy across four divisions: Retail, National Programs, Service, and Brokerage.
  • 6The company's common stock traded on the NYSE under the symbol 'BRO', with a closing price of $38.95 on March 2, 2001.
  • 7The company maintained a strong focus on employee contracts with non-solicitation clauses to retain customer relationships.

Frequently Asked Questions

Brown & Brown operates as a diversified insurance brokerage and agency. Its primary revenue streams are commissions paid by insurance companies (typically a percentage of premiums) and fees generated from administration and benefit consulting services. The company does not engage in underwriting and therefore does not assume underwriting risks.

A significant event for the company was the acquisition of the insurance agency business-related assets of Riedman Corporation in early 2001. This acquisition was substantial, nearly tripling the company's locations and expanding its presence into 24 states. This strategy of growth through acquisition is a key characteristic of Brown & Brown's business model.

The year 2000 marked a significant shift in the insurance market, with premium rates increasing for the first time in several years. After a prolonged 'soft market' with declining rates, this environment of rising premiums, driven by increasing loss ratios of insurance carriers, was beneficial for Brown & Brown's commission-based revenue model.

Brown & Brown's operations are structured into four main divisions: the Retail Division (selling property and casualty insurance and other products to clients), the National Programs Division (developing proprietary insurance programs for niche markets), the Service Division (providing third-party administration, benefit consulting, and managed care services), and the Brokerage Division (marketing excess and surplus lines insurance products).